Over A Million People Use "pay-Day" Loans

[OnionTerror]

I'm sure they serve a purpose for some people for very short period of time, but I wonder how many use one longer term.. Why don't they use a credit union instead? Most moderate sized towns must have one.

http://www.bbc.co.uk/news/business-10964043

Making money last until the next pay day is an old problem, but now there are plenty of new lenders offering the solution of a payday loan.

The number of people taking one out has quadrupled since 1996 according to the watchdog Consumer Focus.

That is despite some companies charge interest rates of more than 2,500% a year.

The organisation is now calling on the industry to bring in more safeguards to protect vulnerable borrowers.

''Payday loans are a valid form of credit and it's much better for people to take one out rather than go to a loan shark," said Sarah Brooks, head of financial services at Consumer Focus.

"But we do think there needs to be a limit on the number of loans people take out and how many loans they are able to roll over."

'Mounting up'

Research by Consumer Focus suggests that 1.2 million people are now taking out a payday loan every year, borrowing a total of £1.2bn.

For many people such a loan is a quick and efficient way of getting hold of short-term credit.

If the money is paid back promptly on the next pay day, this type of lending can be cheaper than paying an unauthorised overdraft or a credit card charge.

However, if the loans are rolled over, debts can quickly escalate.

Dressmaker Stephanie Derby from Finsbury Park in London took out a pay day loan after she fell behind on rent and bill payments.

She was already overdrawn and at her limit on her credit cards.

''I didn't feel I had any other option, I had just graduated and all my debts were mounting up, it really was a last resort," she said.

"I borrowed £400 hoping to pay it back a few weeks later but I was unable to.

"Each month it cost another £56 to renew the loan and after six months the initial loan of £400 ended up costing me nearly £800," she explained.

Problems

However, the pay day loan industry says when managed properly, many people find this type of lending easy to understand and less risky.

''There is a reluctance among many consumers to take on long term loans from traditional lenders, because they feel their financial situation could change," said John Lamidy from the Consumer Finance Association.

"But they find that the short term credit offered by the pay day loans industry does meet their needs.

''We are working with Consumer Focus to find out how serious the problems they identify are and whether they affect lots of people or just a few," he added.

The association is also working with the Consumer Credit Counselling Service (CCCS) to find out how to help borrowers who fall into problems.

The money education charity Credit Action says traditional banks could do more to provide the short term credit people need.

''Banks could offer that kind of money to people by extending their overdrafts for a little bit longer for example,'' said Chris Tapp, director of Credit Action.

"Banks can afford to do that and they are still making millions of pounds of profits so they could do more for their most vulnerable customers."

''They have to make a risk assessment on every lending proposal they receive and quite frankly it does not do any good to lend money out to people if they can't afford to repay it,'' said Brian Capon from the BBA.

Stephanie Derby's dressmaking business is now taking off and she has repaid the loan.

She says she will never take one out again.

But for many other people a payday loan is still the only legal option for short term lending, when money is tight and there is nowhere else to turn.

[Dubai]

Interesting:

http://en.wikipedia.org/wiki/Usury

[fellow]

Why don't they use a credit union instead?

http://www.bbc.co.uk/news/business-10964043

Why don't they just stop spending more than they earn?

[Lucifer]

Why don't they just stop spending more than they earn?

Could it be because the cost of living exceeds their income potential and they don't want the gas cut off?

[SarahBell]

Could it be because the cost of living exceeds their income potential and they don't want the gas cut off?

Nah I really reckon it's cos people can not do without their sky tv, going out, smoking, drinking, etc.

I know people who get loads from the provy man and they get taxis rather than the bus, smoke and drink, and have sky tv... why should they give their lifestyle a thought when they can get by with loans and pawning their gold from time to time.

[Lucifer]

Nah I really reckon it's cos people can not do without their sky tv, going out, smoking, drinking, etc.

I know people who get loads from the provy man and they get taxis rather than the bus, smoke and drink, and have sky tv... why should they give their lifestyle a thought when they can get by with loans and pawning their gold from time to time.

I do despair at the ignorance of many posters here and their at times inhuman lack of empathy for other people, I don't

understand why some people seem to swallow everything they read in the Daily Mail as God's honest truth.

Believe it or not there are honest, hard working people out there who do at times, despite their best efforts run short

of money to pay for everyday essentials.

Instead of blaming them why don't you talk about something useful thaty perhaps explain why they run short ...for example

hign housing cost as a result of our dysfunctional property market, or runaway inflation pursued as deliberate government

policy or falling average wages stemming from increasing globalisation....

So many genuine reasons to be angry about why ordinary people can be exploited by a bunch of nasty high interest rate

bandits, but you prefer to trot out childishly simplistic nonsense that you've read in the Mail.

But hey, if you want to spew out your agenda of class hatred and pointless bigotry and prove yourselves a useful idiot for the

banksters classes, then off you go...

[SarahBell]

I do despair at the ignorance of many posters here and their at times inhuman lack of empathy for other people, I don't

understand why some people seem to swallow everything they read in the Daily Mail as God's honest truth.

But hey, if you want to spew out your agenda of class hatred and pointless bigotry and prove yourselves a useful idiot for the

banksters classes, then off you go...

Daily mail? Real life!

[Lucifer]

Daily mail? Real life!

Hmm...a reasoned and detailed rebuttal to my point, another HPC triumph of unreasoned opinion over fact.

[CHF]

you do do this a lot sarah. Poor people arent the source of your problems i promise.

[xux42]

I do despair at the ignorance of many posters here and their at times inhuman lack of empathy for other people, I don't

understand why some people seem to swallow everything they read in the Daily Mail as God's honest truth.

Believe it or not there are honest, hard working people out there who do at times, despite their best efforts run short

of money to pay for everyday essentials.

Instead of blaming them why don't you talk about something useful thaty perhaps explain why they run short ...for example

hign housing cost as a result of our dysfunctional property market, or runaway inflation pursued as deliberate government

policy or falling average wages stemming from increasing globalisation....

So many genuine reasons to be angry about why ordinary people can be exploited by a bunch of nasty high interest rate

bandits, but you prefer to trot out childishly simplistic nonsense that you've read in the Mail.

But hey, if you want to spew out your agenda of class hatred and pointless bigotry and prove yourselves a useful idiot for the

banksters classes, then off you go...

Thinking holistically like this is actually quite difficult. It requires strength of will to overcome the instinct to pidgeon hole (which has proven evolutionary advantages) and probably requires a high IQ & a very good memory simply to hold & process that much information in your head at once.

If your brain is the equivalent of a massively parallel processor linked to 9.6Ghz XDR Ram you are going to struggle to get most people to understand your arguments let alone agree with them.

One of the threads running through HPC topics is that many (most?) people will never understand the political & economic system that they have to operate within.

And its getting worse.

[50sQuiff]

I do despair at the ignorance of many posters here and their at times inhuman lack of empathy for other people, I don't

understand why some people seem to swallow everything they read in the Daily Mail as God's honest truth.

Believe it or not there are honest, hard working people out there who do at times, despite their best efforts run short

of money to pay for everyday essentials.

Instead of blaming them why don't you talk about something useful thaty perhaps explain why they run short ...for example

hign housing cost as a result of our dysfunctional property market, or runaway inflation pursued as deliberate government

policy or falling average wages stemming from increasing globalisation....

So many genuine reasons to be angry about why ordinary people can be exploited by a bunch of nasty high interest rate

bandits, but you prefer to trot out childishly simplistic nonsense that you've read in the Mail.

But hey, if you want to spew out your agenda of class hatred and pointless bigotry and prove yourselves a useful idiot for the

banksters classes, then off you go...

You might have a point if the number was 10,000, not 1.2 MILLION. This is not just the odd poor family hit with an unexpected cost that month and having to tide themselves over. It's endemic.

[SarahBell]

you do do this a lot sarah. Poor people arent the source of your problems i promise.

What did I do?

Is borrowing money to smoke, drink, have luxuries not living beyond your means?

If there were no short term loans people wouldn't be able to do this. They'd manage. They would get on with their lives.

Did your mother never go without anything when you were a kid to ensure you had something? That seems to have gone by the wayside.

Edited August 14, 2010 by SarahBell

[SarahBell]

Hmm...a reasoned and detailed rebuttal to my point, another HPC triumph of unreasoned opinion over fact.

do despair at the ignorance of many posters here and their at times inhuman lack of empathy for other people, I don't

understand why some people seem to swallow everything they read in the Daily Mail as God's honest truth.

No - what I observe.

But hey, if you want to spew out your agenda of class hatred and pointless bigotry and prove yourselves a useful idiot for the

banksters classes, then off you go...

How can observations be an agenda?

Seriously I do not know what planet you live on but it doesn't seem based on Earth.

[xux42]

do despair at the ignorance of many posters here and their at times inhuman lack of empathy for other people, I don't

understand why some people seem to swallow everything they read in the Daily Mail as God's honest truth.

No - what I observe.

But hey, if you want to spew out your agenda of class hatred and pointless bigotry and prove yourselves a useful idiot for the

banksters classes, then off you go...

How can observations be an agenda?

Seriously I do not know what planet you live on but it doesn't seem based on Earth.

Sorry to interfere if you are enjoying the row but - Lucifer never said the people you describe don't exist. He is suggesting that they are outnumbered by legions of people who are desperate, poor and frightened.

I don't know what the ratio of feckless vs. poor is amongst the total that use pay day loans.

Do you?

[SarahBell]

Sorry to interfere if you are enjoying the row but - Lucifer never said the people you describe don't exist. He is suggesting that they are outnumbered by legions of people who are desperate, poor and frightened.

I don't know what the ratio of feckless vs. poor is amongst the total that use pay day loans.

Do you?

Are they not the same thing?

If you get to the point where you need a payday loan and you have cut back every expense you can then you are still living beyond your means and need to address that.

Define poor (vs feckless) -this is my definition: have cut budget to bone, walk rather than take cabs or the bus, eat home made cheap food, have early nights as it's cheaper on heating/electric/entertaining... rarely buy anything but every purchase is weighed up carefully and cheapest sourced.

If the people taking payday loans are those poor (not feckless) then I have sympathy for them. However the poeple I see going about their every day lives won't make those cuts to get by or reduce their debt.

[singlemalt]

Why don't they just stop spending more than they earn?

If you'd ever been in a situation where you'd got no money and very few options you wouldn't need to ask. I'm sure many people who use these services aren't just frivolous spenders.

[Lucifer]

do despair at the ignorance of many posters here and their at times inhuman lack of empathy for other people, I don't

understand why some people seem to swallow everything they read in the Daily Mail as God's honest truth.

No - what I observe.

But hey, if you want to spew out your agenda of class hatred and pointless bigotry and prove yourselves a useful idiot for the

banksters classes, then off you go...

How can observations be an agenda?

Seriously I do not know what planet you live on but it doesn't seem based on Earth.

Your agenda is. well, actually, its not your agenda, you are just repeating ad nauseam a line thats given to you by

those above: that ALL poor people are poor because they are stupid and feckless and they deserve whatever they

get.

If you stand back and use a bit of thought you would see that this is transparently obvious propaganda designed to

distract from the real reasons from poverty..globalisation, inflation, high rents, lack of opportunity, gross inequality

of income etc etc: its like Cameron making a big show of wanting to cut £1.5 billion from the bill for benefit: and admirable

aim but why did he not mention the far greater lost by the treasury every year to tax evasion/avoidance: why make such a

fuss of a "working class" crime yet totally ignore a far worse issue?

By following your "poor people are scum" arguiment you are contributing to the dehumanisation of a whole class of

people that in future will create a climate that will make even easier to dump even further indignities upon them, and

ultimately uopn you.

Its actually in your own interests to have some sympathy and understanding for those less fortunate for you:

history tells us that that plutocratic societies (those with great inequalities) always catastrophically implode,

causing a whole bucket load of suffering for everyone.

On a more immeadiate level look at America now...the sh*t thats been dumped on the American working class for the

last 30 years is now being dumped on the middle class..like the working class before them they are now seeeing a

dranatic collapse in their living standards and life chances.

Please just have a little more sympathy for people and think a little bit more deeply about issues, their causes and

implications.

[SarahBell]

If you'd ever been in a situation where you'd got no money and very few options you wouldn't need to ask. I'm sure many people who use these services aren't just frivolous spenders.

Don't judge!

Another assuption based on your own prejudiced view.

I have been in such a situation when I was beyond broke. I didn't go and get a silly expensive short term loan. I just didn't spend anything more than I absolutely had to. It means sacrifices though and I think this my own assumption (based on the evidence I see every day) that most people just dn't want to skrimp and save.

[Lucifer]

Don't judge!

Another assuption based on your own prejudiced view.

I have been in such a situation when I was beyond broke. I didn't go and get a silly expensive short term loan. I just didn't spend anything more than I absolutely had to. It means sacrifices though and I think this my own assumption (based on the evidence I see every day) that most people just dn't want to skrimp and save.

But your experience is not everybody's experience, your circumstances at the time aren't other peoples at this time.

Lifes like that, it has infinite variations.

[SarahBell]

But your experience is not everybody's experience, your circumstances at the time aren't other peoples at this time.

Lifes like that, it has infinite variations.

My circumstances then are as valid today. If I don't have enough money for something I don't have it. I budget. I save up.

1M people using payday loans means that 1M people need education on cutting costs, learning to do without and learning to save.

Saving is discouraged in this society. It's seen as foolish when you're on the poor end of the scale.

[Lucifer]

My circumstances then are as valid today. If I don't have enough money for something I don't have it. I budget. I save up.

1M people using payday loans means that 1M people need education on cutting costs, learning to do without and learning to save.

Saving is discouraged in this society. It's seen as foolish when you're on the poor end of the scale.

Yes, obviously all those 1 million have exactly the same circumstances and are living exactly the same life and they are

obviously all feckless dole scrounging scum and probably single mothers to boot. Well, I just hope that they get what they

deserve thats all I can say.

[SarahBell]

Yes, obviously all those 1 million have exactly the same circumstances and are living exactly the same life and they are

obviously all feckless dole scrounging scum and probably single mothers to boot. Well, I just hope that they get what they

deserve thats all I can say.

I'm not sure what you're so angry about but you're being a bit odd even for round here.

[Lucifer]

I'm not sure what you're so angry about but you're being a bit odd even for round here.

I'm not at all angry, I'm just a bit despairing at your inability to use your brain.

[sun n sea]

If there were no short term loans people wouldn't be able to do this. They'd manage. They would get on with their lives.

Except that loan sharks and illegal money lenders already exist and would quickly move in to make a bad situation even worse.

Dip into payday loans a couple of times and you discover that the interest rates are designed to trap you. By charging such high rates of return the payday company is hoping that their interest costs will push your monthly budget into the Red on a continual basis... that way you are forced to keep topping up with and then paying back payday loans month in month out

Given the way payday loans are structured all it takes is one emergency shortfall in funds to drive you into their arms... once you're in you are permanently trapped.

Personally I detest the way poor people are exploited like this and would much rather see co-operatives and local savings banks put in place.

[xux42]

Don't judge!