Payday loans - discuss the MSE guide

[MSE Helen Saxon]

Hi!

This is the discussion thread for our

Least Worst Payday Loans guide.

It was a tricky one to write... here's a quick taster of what's in it...

"Need some quick and easy cash? A payday loan feels easy, but this short term high cost credit can get you into an expensive nightmare of trouble � risking scarring your finances and leaving you repaying many times more than you borrowed.

We don't like payday loans. Most people who get them shouldn't. Yet if you're considering one, we want to ensure you can protect yourself. The first step is to consider cheaper alternatives. If that fails, we'll take you through the least nasty of a bad bunch."



Click reply below to discuss. If you haven�t already, join the forum to reply. If you aren�t sure how it all works, read our New to Forum? Intro Guide.


Thanks, folks

[roddycam]

I liked TxtLoan (soon to become MyJar I think). �300 max, �17 per �100 borrowed.

[Fruit and Nut Case]

Some good advice there. The problem is getting potential customers to read it before they start down the slippery slope.

[fozmcfc]

I expect, some people will criticise this thread, but if used responsibly, Payday loans can be less costly, than bank charges.

The only real advice is, if you take one out, you are going to need to budget the next month, to be able to pay it back and live.

[Scooter23]

Quid 24 are not to bad when you extend loan you pay the interest but it also reduces the debt �100 loan first extend �31.90 �20 from the debt the rest interest. If u have a problem they are helpful.

[sunnsea]

I have used wonga on several occasions. I use it because its fast and the money really is there within 15 mins from applying and not in a few days like a lot of the other companies are.
I wouldn't use it if I had another means of borrowing but as I've been transferred with my job, my wages have gone down and I cannot afford to pay all my bills without additional help until I'm up to speed on my new job (should take about three to five months for wages to rise)
Its easy for people who have enough money in their bank to say budget better, but as my wages have gone down and every other bill I have has gone up - I'm stuck.
I only borrow the money when I am desperate as I know it will be straight into my bank and so to have to wait a few days (as Martin suggests the regulators should enforce) would mean that I had to ask for the money before I actually needed it just to ensure I had it in time.
Hopefully, my situation will be ok in a few months and I can put this behind me.
Got to say I was shocked to read about mortgage lenders refusing to lend anyone who had had a payday loan. Anyone know how long it is from clear using payday lenders before you can be accepted for a mortgage? I was hoping that in the next couple of years I would be able to apply to get one as the rent has gone up again this month.

[DCFC79]

Should be OK with that sunsea (getting a mortgage in a couple of years.), makes sense PDL's affect mortgages. You tried reducing your outgoings sunsea ?

[Herbalus]

If you resort to payday loans because you can't afford your bill, you're essentially making a bill you can't afford even more expensive. If you're so tight for money that you need an extra �100, you are taking �130 from next month's budget which is really hard.

I know many people say they have no choice, but I would rather live off Tesco basic sausage rolls than give Wonga �30.

[hosted]

Ive used wonga and the speed and ease are second to none, but and its a big but. Its such a vicious circle and so difficult to break. It took me a year once I started maxing out. payday lenders also have a detrimental effect on your credit file. I was turned down due to "regular use of payday lenders in the last 12 months" by a high street lender despite the fact I never missed a payment to them and had no recent missed payments with any of my bills. admittedly that probably wont be the only reason as there is one default that is five years old that im trying to sort.

My advice would be not to go down that road If you can avoid. Id lend you �20 if it prevented you from going down that route if only to save someone the misery of ending up in the same situation i did with payday lenders.

[Apples2]

By definition, if you need a payday loan, you don't have any money at the end of the month.

High street lenders expect you to have money left at the end of the month so you can repay their loan.

Repaying a payday loan on time maybe honourable but it's hardly something worthy of boasting about.

[JonathanJ]

I believe payday loans have their use and a valid place on the loan market.
I have used them a few times to get out of sticky situations, such as car broken down, fridge packed up, unexpected things etc.
They have honestly got me out of difficult situations and have always been paid off in full when they were meant to be.

If you borrow the money as you simply don't have enough to live, too much month at the end of the money, well, thats not a smart position to get yourself into!..........

[kloana]

If I ever used a PDL (I haven't, but do recognise their place in the market - as well as their pitfalls), I'd be inclined to use a well-known 'household name' online lender, or a national/large-ish chain store that'd be found on the high street, for cheque cashing, pawn broking, and so on.

I don't see any point in naming specific names for recommendation, as I have no experience with any, but my logic is that better-established firms have more of a rep to protect. A dubious rep, no doubt, but they are nonetheless somewhat accountable to the public opinion at large.

I'd also want to inspect their charges first. I don't just mean APR and so on (recognising the faults of using APR as a means of comparing PDLs with mainstream loans), but added fees, etc., such as those added in the case of defaulted/late payment. Just in case I found myself in a bind - I'd rather be negotiating with a company whose charges for these matters are transparent and fair.

Avoid absolutely anyone who collects a fee for attempting to source you a loan, whether dressed up as a PDL or a longer-term option, as the loan in question just won't materialise, and you'll be anything from c.�50-70 worse off at the end of the ordeal.

[keepcalmandstayoutofdebt]

Originally Posted by Apples2

By definition, if you need a payday loan, you don't have any money at the end of the month.

Absolutely. Took me a while to grasp but I'm there!

PDLS always just compounding the problem in the 'wrong hands', fortunately I do rather fear my latest employer would not take kindly to anyone taking out a payday loan so I'll consider myself lucky
..If nothing else.

[easilyparted]

I have shares in Provident Financial. Is this company ethical?

[Herbalus]

Originally Posted by easilyparted

I have shares in Provident Financial. Is this company ethical?

Not particularly. I would say they make money from people in unfortunate situations. They would probably say they enable people to access credit when there are few other options for them.

They have 3 companies. One credit card company and two personal loans outfits. All aimed at people with less than perfect credit history and are very expensive.

[barrrrr]

I have three issues with the above (and the 'guide' itself)

1. Stop calling things PDLs. It sounds stupid, will confuse people who can't work it out (who might need help on the subject, but get blinded by science), and also, Americans reduce everything in the world down to a three-letter acronym, which should be reason-enough not to do it yourself. Not to mention 'Payday' is one word, so they should be PLs not PDLs anyway. ... pah.

2. What kind of a misleading guide is it that only explains the costs when people borrow for a whole month? What miniscule percentage of people who get payday loans take them out at the start of their payday month? Virtually NONE, that's how many. Most take it for a week or two, and any decent and honest guide would give the people the information that Wonga (whom I do not work for) only charge you for the amount of days you borrow it for. So instead of the misleading "Wonga charge you �130 to borrow �100 for one month" why not explain that to borrow �100 from them for ten days would only cost �115 to repay, wheras ALL of the others charge you for a whole month (ususally �25 interest per �100 borrowed) and so you'd repay �125 for one day's loan, �125 for ten day's loan, �125 for 25 day's loan. .... EH?! So that's �10 Martin COULD save you (based on 10-day �100 loan of course) if he happened to give you the full information.

3. For this to be a decent proper guide... and a decent, proper forum regarding it ... you have to stop going on at people for taking the loans out. If they've got the ability to find this page, they've got the ability and wherewithall to find non-payday lenders if they were able to borrow from them. ... So concentrate on giving them information that actually helps, rather than blithering on about "month left at the end of your money" or "try borrowing from mates instead," etc

Barry

[Apples2]

(Text removed by Forum Team)

Besides, you state only a miniscule percentage apply at the start of the month You must be new here if you think people who have a payday are the only ones who apply.

Whilst giving recognition to the "least worse" we should hardly be advertising for them. This type of company occasionally post on forums pretending to be satisfied customers, not that this type of tomfoolery would happen here right Barry?

[jojo1964]

Just saw an advert for one PDL company called Oakam, says "I thought being on benefits you would say no" apr of 405.3. With a minimum income from salary or benefits of �400. I know that's not the highest apr I have seen but advertising loans to those on benefits is asking for trouble.

[barrrrr]

Barry John Edmond, born in Northampton in 1974. Now living in Canada, previously in Southampton England for the last ten years WHERE I WORKED IN SHIPPING. I don't even know WHERE Wonga is based (except somewhere in England, of course). My knowledge comes entirely from experience in having taken out more than 30 payday loans over the past few years.

Any of you who were VERY observant might have recognised me from a post on MSE Martin's Facebook page where I explained my whole experience (and the attempted murder I suffered that caused my emergency/difficulties which led to taking payday loans)

I have reported those above for their insults and accusations, well-done for highlighting yourselves as the idiots I was referring to originally, who need to be productive when it comes to talking about people who take payday loans instead of taking cheap shots at those who need help.

After all, Martin's mantra is about financial education, nothing about mocking people or supposedly 'outing' people who work in the industry. Yeah?

Sorry for mistaking MoneySavingExpert's Forum as being for helping people, didn't realise it's a High-and-mighty community centre for the delusionally superior.

How dare you accuse me of being underhand just because payday loans helped me get my life back on track. How dare you accuse me, just because I highlighted howmisleading the guide was. People (in general) take out payday loans when their salary has run out too early in the month, so why have a guide to help people when the information isn't relevant to the need/use.

Anyway, I'm done with this conversation. This forum page is clearly only here for the purpose of belittling people and accusing me; neither of which, frankly, I can stomach. And is exactly the reason I left England. Full of people who think they're better than everyone else, unaware that they're the lowlife. Canada is full of people brought up on decency, helping and manners. Something the posters above could do with considering for the future.

[ladtrying]

Completely agree Barrrr!