Thursday, Sep 23, 2010
More Self-Certified Loan Lunacy
BBC: Affordable loans plan is unveiled
"A new not-for-profit lending scheme is being unveiled aimed at giving manageable loans to people who cannot obtain conventional loans... However, the interest being charged is higher than the maximum by law that credit unions can charge. It will charge 29.9% APR in the pilot scheme, rising to 49.9% APR in April... The "vast majority" of the set-up costs for the scheme have been met by the Department for Work and Pensions, according to the NHF. There has also been input from local housing associations and the Royal Bank of Scotland." Yup, you read that correctly, various quangoes are going to fire hose taxpayers' money at people who can't possibly afford to repay.
Posted by mark wadsworth @ 01:02 PM (971 views) Add Comment
9 Comments
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1. uncle tom said...
The way to deal with loan sharks is to lock them up..
People on low incomes can't afford to pay high interest - to have today, they have to have even less tomorrow.
I firmly believe there should be a maximum interest rate - maybe 10% over base rate. If lending is too risky at that rate, then the loan should not be made. Period.
It should be a criminal offence to charge more than the maximum rate, and anyone caught doing so should, as a minimum penalty; have the loan (both principal and interest) struck out, and forfeit to the borrower.
2. bidin'matime said...
"Affordable" - 49.9% APR...??!! They're 'avin a laugh, aren't they..?
It sounds like a recipe for disaster to me.
3. mark wadsworth said...
UT I'm not a big fan of regulation, but your suggestion seems sensible enough to me (they have these rules in other countries and the world hasn't come to an end).
BMT, and it's your taxpayers' money that is being put at risk :-)
4. peter said...
Sounds like a silly idea.
If they are such bad credit risks that they can't get a commercial loan, why should the taxpayer be dragged into the picture?
5. Arthur Kinnell said...
Call me an old cynic, but when the borrowers default, will the taxpayer be picking up the tab just for the loan, or will it also be for the interest?
6. Rental John said...
..manageable loans to people who cannot obtain conventional loans... There are those who cannot get access to credit cards or normal bank loans....usually because of poor credit rating, are feckless with money, or are on state support or low incomes. They are easy pray to loan sharks, and the 'legal outfits' such as Wonga and pay-day loan companies. Certainly these people need access to affordable credit to ride out the peaks and troughs of living costs, etc - and the best option is such as credit unions, not government backed high interest loans. Should be called Quonga.com
7. general congreve said...
@4 - agree
This is completely pointless, if these people are so fiscally irresponsible to get into loan shark situations then pretty quickly they'll be unable to repay their govt. loans @ 30%, be told they can't borrow any more and be back begging the loan sharks for money.
Totally f3ckin pointless. All helps increase the deficit though :) Go gold!!!
8. it_is_going_with_a_bang said...
Well sounds like lending to people who will quite likely not be able to pay it back.
Short term lending? surely that is just an overdraft is it not? Why go and set up a whole new system of lending?
May be a better way would be for the government to act as a guarantor on a traditional cheaper overdraft at a high street bank - rather than re-inventing the wheel.
9. estrader said...
UT @ 1 , I don't agree with you at all. I want a free market economy not an "I'm not responsible for my stupidity" economy.
"A new not-for-profit lending scheme is being unveiled aimed at giving manageable loans to people who cannot obtain conventional loans"
ie/ A new way to keep consumers borrowing and spending.
MADNESS!