To hope that the CofE can kill off Wonga, but think they might struggle?(229 Posts)
I would love to see an end to Wonga, but we already have credit unions, I dont know how we can change the culture.
IIRC, with our credit union, you have to save first, then you can borrow. Maybe that is what is putting people off.
Tbh short term pay day loans aren't a bad thing if used responsibly for emergencies. Sadly people use them to have spends to go on the piss and that's where they come unstuck.
People will always need to borrow small amounts over short periods of time.
if banks were a little more helpful with overdrafts short term loans like they once were many people would not need to use companies like wonga
i have had to use them myself a few times, paid the money back within 10 days or less i have more than 3k going through my account every month and always have a few hundred in my account but my bank will not allow an overdraft as i do not work full time and my salary changes from month to month (i do not earn 3k a month)
but yes they should not be charging people the ridiculous amounts of interest when payments are late
I'm not excusing the industry but the rates of interest are a load of shite, it's only because they HAVE to put an APR on the loan that it looks so ludicrous. However, the loans themselves are only supposed to last a month at the most so a late fee is fair and should be expected but should be a percentage of the loan not a fixed rate.
Because they are for a month APR is irrelevant as you don't take the mone out for a year
The problem is is that most people get caught in a trap.
They are short one month, or they have an emergency so the take out a PDL. The next month they pay it back with their wages leaving themselves short again, so they extend the loan or take out another one. And so it goes on and on.
'the loans themselves are only supposed to last a month at the most'
Payday companies target people who are already in pretty precarious financial positions. If you think Wonga expect their customers to borrow as a one off you are deluded. They target people they know will become ensnared.
That's where the onus is on the lender to be responsible and step the loan down each month
They don't make much profit on return and bad debtors, the money is in selling new loans
Wonga have the lowest default rate in the industry, you know. It's a very solid business model that the CofE can well afford to copy.
if someone takes out a £200 loan they then need to pay back £250 the following month in one go. They are the £250 short so need to reborrow.
Wonga makes as much money on them month on month.
But they don't. They still haven't had the initial £200 back and have lent an extra £50 out On top to tide the person over. Do you see how?
They are completely immoral and should be outlawed.
Many American states have banned their trading hence why they are now flooding the UK market.
What I'm saying is that it's impossible for people to pay them back in one go, people are stuck paying them back month after month often needing to borrow more and more to cover the extortionate interest.
No, they need regulating to become better lenders and to loan responsibly. People will resort to loan sharks if they can't find proper ways to borrow the money.
Not if they're loaned the money responsibly and are stepped down rather that having their loan upped. So borrow £200 one month, can't pay it back, ok borrow £150 next month and reduce like that until its cleared. People get stuck when their loans are increased not decreased.
Plus ce change - the Catholic church tried this from the Middle Ages onwards, by establishing Monti di Pieta. At the time, lending at interest was prohibited by the church as "usury", so the only people who could loan money at interest in most European countries were Jews (not being Christian, they were exempt from the prohibition). The church established the Montis in order to take business away from Jewish money lenders (largely due to growing anti-semitism). In the end, the "non interest" loans that the Monti offered where actually much more onerous and more expensive than loans from the Jewish money lenders, so a lot of the monti collapsed.
Credit unions are great, I don't think people have enough awareness of them.
The CofE has the advantage over credit unions because it has thousands of premises all over the country at its disposal. Its success will depend on how it services bad debts if it doesn't charge Wonga's high interest rates.
I hope it works. I'm not a fan of religion but this could do such a lot of good.
I know in Northern Ireland, Credit Unions are a life saver for people. They are well run and offer very fair lending. Last winter they offered up to a £1000 low interest fuel loan to all its members.
perhaps the church could sell off its properties including Lambeth Palace and actually put its money where its mouth is for a change.
Utter money grabbers.So immoral and have apparently left corpses in their wake in a shall we say less sophisticated country.Money money money in a rich man's world.
Not the firms fault that people took multiple loans with multiple companies and over stretched themselves.
Perhaps if the lenders out independent debt counselling advice or where to access it in with the loan paperwork it may help?
People are responsible for themselves, ultimately, yes you can regulate the industry but the majority of the responsibility stays with the individual.
Btw do you like green jelly with your moon on a stick?
Of course the apr is relevent - to see the monthly interest rate divide the apr by 12.
Payday loans pursue those who are already on the bread line. Why else do they advertise on daytime television?
Yes people are responsible for their own finances but that doesn't mean we should allow companies like this prey on people who clearly have no clue how to manage their financial affairs.
I agree people should be responsible for themselves. It's a nice theory. It's an easy theory to espouse when it's not YOU up to your ears in shit. Everything in this country is set to penalise the hard up or those temporarily in trouble from set ups like Wonga to the legalised robbery of the utility companies who charge so much more for pre-payment which is an unavoidable necessity for so many on low/precarious incomes. It's shit. Really really shit. And I'm afraid I don't believe a different Government would do diddly squat about it.
*Failure to keep up with your repayments may result in the loss of your home and/or plague, pestilence, famine, the requirement to cut off your hair or sacrifice your first born to the Lord Almighty, or your own death in some barbaric old testament way, in which case that is just the start of your problems as you burn for an eternity in a special circle of hell design specifically for you.
It's terrifying how much debt is utility debt.
Souredstone..had to google.Afraid not,just realised that I did get it all after all...laughing!
when people have been coping fine with their wage and then get made redundant (and insurance will not cover all payments) or they company goes bankrupt then they struggle to find a job paying the same money, then maybe they are ill or there are other changes in circumstances that are beyond their control (the economy, the cost of living rising) as much as they want to be responsible for themselves they at times need a little help and sadly where the banks were willing to help (of course for profit) they are not so willing so this is the gap that these companies have filled that make a lot more money from people in these situations (like myself) than the banks ever did
how it services bad debts if it doesn't charge Wonga's high interest rates
Plague of locusts? Flood? Senfong the Parish priest wnd the old gimmer who plays the organ round with a baseball bat?
I took out a Wonga loan this month because I've been on holiday and struggled to eke my money out to the end of the month. I borrowed £100 for 2 days and it cost me £7. I would rather do that than borrow off friends or family and be embarrassed. A credit union wouldn't have done that.
It provided a useful service to me in that situation.
*Failure to keep up with your repayments may result in the loss of your home and/or plague, pestilence, famine, the requirement to cut off your hair or sacrifice your first born to the Lord Almighty, or your own death in some barbaric old testament way, in which case that is just the start of your problems as you burn for an eternity in a special circle of hell design specifically for you.
Monthly interest rate is not APR/12. Interest compounds. You need the twelfth root - anyone got a calculator...?
I wonder what the rate is of a payday loan compared to the interest and fees charged for an overdraft from a bank.
If you needed £100 would you rather pay a one off £7 to have that money or the continual interest of an overdraft, or the up to £35 fees per day for an unauthorised overdraft?
On average payday loans charge £25-£30 per £100 per 30 days.
What bank charges £35 per day for an unauthorised overdraft???
Have you never been charged by your bank for going overdrawn into an unauthorised overdraft? Daily fees equivalent to the one off fee of a payday loan
I've never heard of £35 per day charges from a high street bank.
I think it's Lloyds that has, or had, rates that high but could be wrong
Banks are still charging £30 for missed direct debits and £30 if you go aver your overdraft. Payday loans are cheap in comparison. I was charged £60 for going £3 over my overdraft and one missed DD for £14.
Banks are the parasites not payday lenders. Short term borrowing from payday lenders works out a LOT cheaper than any bank. The key is to pay it back straight away. If you do not pay it back straight away thats when the trouble starts. They shouldnt t be lending to people without finances to pay it back in the first place but thats a completely different argument to the APR being charged.
Banks have changed their rules to pay off the huge amounts they have had to cough up over misselling PPI. A £25 per day charge for an unapproved overdraft is now common.
That doesn't mean that places like Wonga are acceptable.
I know Santander and HSBC both charge at least £25/day.
If the CofE can offer a viable alternative to these slightly-tamed sharks, then it seems like a good use of their premises.
I can imagine the CofE getting tied into knots because a few people may object on scriptural grounds to 'moneylenders in the temple' . But presumably the genuine desire is to help people not to profiteer.
What is the church going to do when people fail to repay their loans?
Will they be as convenient to use as Wonga etc? Will people be able to apply online and have the money in their account within an hour?
Sorry but I don't see this working. I don't see the kind of people who get into trouble with Wonga loans being likely to deal with the church.
Just thought of something - I know that Muslims avoid all usury, and so have different means for financing mortgages etc (no idea how they do it) - do they have any mechanisms for helping people who need loans that the CofE could learn from?
I would be absolutely delighted if they managed to get rid of this type of company. It preys on the poor.
I think its about time the church stepped up and adressed the real problems faced by people and not just,imo ,pay lip service to them.
People willingly take loans, why should payday loan companies be banned so long as they are clear about high interest rates?
What ever happened to personal responsibility?
This is what the churches should be doing - going to the most at need and helping them. Am sure that churches who host the Foodbanks have sent feedback up the church hierarchy explaining why they see people at Foodbanks - and payday loans must play a big part. My BIL is the director of the local credit union - if it wasn't for that I wouldn't know they existed!
Because not everyone who takes these loans realise the impact it will have on them months down the line. Many many people are without financial sense.
Yes they're clear about the APR but yes they are also preying on the poor.
There have been plenty of posters on this thread saying they have used them and that they have been fine.
I think we have enough of a nanny state already. People are not forced to use them, and I would rather someone used Wonga and couldn't pay it back and damaged their credit rating than used a loan shark and had their knees damaged.
Yes, what a great choice legal loan shark or knee breaking loan shark.
Santander charged me hundreds for going 14p over drawn
PDL also cause great damage to credit files, so while people may use them once, they wont know it could effect them for years after.
Also. If you cant pay wonga back, they will keep trying every day to take money off your debit card as soon as money goes into your account. They dont care if they leave you with nothing.
They also refuse to set up payment arrangements.
£7 on £100 over two days sounds fine. If any of us borrowed £100 of a friend (out of desperation) and then paid it back you would normally go out and buy a bottle of wine/flowers/chocs. It wouldn't be unreasonable to spend £7 on any of these gifts IMHO.
The trouble comes when you don't pay back on time but this is the issue surely. If you borrow money and don't pay back as agreed then, circumstances aside, you are a risk. This is presumably why regular banks will not lend to you in the first place. This is subsequently why people feel they need to resort to these types of companies and why they exist.
Otherwise you are asking a lender to treat everyone the same, irrespective of them being a bad risk and the potential for losing money. This is exactly why bad payers are severely penalised. After all none of us would lend money to a mate that we knew was fecking hopeless at paying back money.
But £7 on £100 and ruined credit for 6 years?
Sorry I didn't read that bit. Ruined credit? People who usually use Wonga have ruined credit anyway - hence them not being able to borrow from a high street bank.
banks are not lending out to people with reliable, steady incomes either
I asked for my overdraft to be increased this month twice, it was a resounding NO. I was lucky that the bank of Mum was open but I am not naive enough to think everyone has that option (and to be fair I think it is the first time I have asked her! and I felt awful doing it)
I recently tried for a loan with natwest (my bank of twelve years) for 4k to clear all my debts. They refused, despite me easily being able to afford the repayments and having previously taken out and paid off in full a loan of similar size when I was younger.
So now I am paying a pitiful amount off my debt each month and it's barely making a dint in the figure. I occasionally use QuickQuid when in a total fix and find them reasonable. Eg £100 over 2 weeks = £112 repayable. I would never defer my payments or anything as I'm scared of costs spiralling. Their customer service is DIRE.
I wouldn't ban them though. Where else would people go for short term loans? (And yes, in an ideal world people wouldn't need short term loans.)
Banks lend to people based on internal risk grading. Those they deem to be a high risk have less opportunities to borrow money, irrespective of income stability. I'm not making presumptions on your financial management Owllady but this is how it is and most banks have tightened their lending criteria slightly.
If you already have an overdraft and have asked for an extension then they see this as a larger risk than they are happy to take. Again I'm not saying anything about your financial circumstances but just that extending an extension just looks like (to them) that you are not managing your account properly.
I think the idea of the CofE supporting credit unions through allowing use of their property (church halls etc.) and financial expertise within their congregations is a very good idea, and really practical way to help the poor and vulnerable in society. (I caught an interview with the CofE rep on this on BBC News today)
I was surprised though that they appear to have gone about it by attacking Wonga specifically (from newspaper front page - i ?) - I would have thought they could have gone about it a bit more positively and said that there is a problem with vulnerable people not being able to access short term loans and so turning to so called "pay day lenders" and they'd like to help by supporting the credit unions to become more strongly established and accessible to all, and would like to offer their premises and financial advice in order to do this.
Basically I think it's a pretty good idea, but have some quibbles over the way the publicity for this has been and is being handled.
Should be a good opportunity to emphasise the practical support of the church for those around us - so far I'm not really hearing that.
I'm glad Mumsnet doesn't allow these pay day loan sharks to advertise on here. I loathe it when they advertise on TV and would like to see that banned as well. I think the C of E means well but it won't solve the problem. The government should step in and ban the pay day loans.
Surely though Vivienne there are alternatives to pay day loans being banned by government, all it needs is some nice, slightly more ethical people (C of E ?!) to come in, set up a better system of loans with lower rates, and people will soon hear about it and choose to use them instead.
Most people, however bad they are with money, or however difficult their circumstances, will tend to choose (more or less) the loan offering them the best deal ?
Wow, sounds like I'm becoming a believer in market forces in my old age
< ponders, time for a blue rinse ? >
BTW - Many of the early banks were set up by the Quakers (or "Friends")
who benefited from their honest reputation to do very well in business
- banking and chocolate manufacture being two specialities
I'm not sure whether CofE just intending to support and encourage (existing and new ?) credit unions, or set up some system of their own ?
Not everyone (by any means) understands what is meant by APR rates they may see mentioned.
Imagine asking people in a street survey how much you'd have to repay on loans of different APR over different time periods, and what sort of answers you'd get !
Justin Welby is the ultimate Poacher turned Gamekeeper.
I think its quite funny really
The Cost of borrowing .....
Put your figures into my spreadsheets and compare
Credit unions only lend money to depositors who are a good risk. Pay day lenders lend money to people with no assets, savings, job, etc. If the Pay day lenders didn't exist or if they made their lending criteria stiffer so that they could charge less interest, the borrowers would not be heading to church, they'd be using unregulated loan sharks.
"I'm not sure whether CofE just intending to support and encourage (existing and new ?) credit unions, or set up some system of their own ?"
As I understand it, they're only offering access to premises... church community centres etc... for the credit unions to set up. They're not planning to back any losses.
I quite agree with OP and without sounding too flippant I would be delighted to see an end to their bloody stupid tv adverts which are on at inappropriate times and I loathe them.
I totally agree that banks need to be a bit more forgiving, particularly with overdrafts. I lucked out and got a £500 overdraft when I set up my account as a student, and they never took it off me - without it, I'd have had to borrow a lot of money from somewhere to cover the shortfall caused by needing a massive rent deposit.
Unfortunately, this isn't going to happen because people take the piss, regardless of the source of money. DP and I used to volunteer at our local credit union, and it basically went bust because so many people were taking out loans and just not giving anything back.
I doubt payday loans are going anywhere, though. Agree with others who say rather bad credit than getting injured for late payment to loan sharks.
If Payday loans were banned, where would desperate people turn to for money? You'd just be moving the business from the legal sector to the black market.
Of course the Church is not going to lend people money, just allow credit unions to use their premises (not just churches) and encourage church members to volunteer skills and advice. Also credit unions benefit from having a broad range of members - not just people with bad credit ratings - and this is how they work in places like Ireland. Well done ArchBish; the first really useful thing the Church has suggested in decades.
Welby cannot ban anything
and the CofE will not get a banking licence - even though the Archbishop has a personal one
what they WILL do is make it really, really easy to access Credit Unions and the CAB on Church premises
to make life hard for Wonga and co
those footballers aren't all bad
Well done Cisse. You had to give in in the end, but it was nice while it lasted.
The Credit Union s in Ireland also have a good relationship with local schools, sponsorships for competitions etc, running art exhibitions of pupils work. They run a school savings scheme too which is excellent. Dh and I save for the dc obviously, but they also have credit union accounts, where the money can be collected each weds in school. Some weeks, the ds who are, 7, 9 and 11 might put in just £1 other times its more. But they have all a good understanding now of what it means to save and they know what interest is! I often hear them say, I'll spend a bit of that £5 granny gave me and put the rest in the cu. i know they could just use a money box and a bank but it saves me having to be organised & from bringing a bag of coppers to the bank.
"Wonga have the lowest default rate in the industry, you know. It's a very solid business model that the CofE can well afford to copy."
Please tell more? (interested)
Credit Unions are the way to go, imo. Great to see the Church leading the way, but sad local Councils didn't get there first.
Of Course Wonga have a low default rate.
They never write a loan off, they just roll it into the next one and keep chasing for daily installments
''Also. If you cant pay wonga back, they will keep trying every day to take money off your debit card as soon as money goes into your account. They dont care if they leave you with nothing.''
Yeah, they really misuse continuous payment authority, and banks collude by falsely telling their customers that they can only cancel these agreements directly with the payday lender. Complete bollocks of course, you can tell you bank to refuse payment requests. Vested interest I wonder. If payday loans are bleeding your account dry, it's almost a dead cert that you'll get an unauthorised overdraft and bounced direct debits. Then they can charge you for this thus sending you further in to the debt spiral.
There is a woman in that article, wonga raided her bank account 13 times in 2 days and took £5000 in total. They should not be allowed to do this. She hadn't even taken the loan out, she was a victim of fraud.
on a lighter note, Wonga are stepping up the trade war here: www.newsthump.com/2013/07/25/wonga-com-retaliates-by-unveiling-believable-religion/
Sorry, but I have used Wonga in the past and they were great - they saved the day. I have a good, regular income but I live from month to month (no savings after a bad divorce) and bad credit rating after divorce meant finance problems so no bank is going to lend me money.
When the bills come in before my salary does, what else do I do? I know I have the money, it's just the bills have come first...so Wonga steps in. I felt like they had faith in me where no other institution did, and if they take a cut for helping, isn't that reasonable? They have to make a living too. I have always paid off early and never defaulted. More than the Church of England has done for me - are they going to help out then? Hardly think so. I feel like writing personally to tell the Archbishop so...
thebody Please don't suggest selling Lambeth Palace. Our LO grandparents will move there soon.
A very good idea. Hopefully it will give at least some of the people who now use Wonga et al another option.
Maybe he who is without sin should cast the first stone: http://www.bbc.co.uk/news/business-23459932
Wonga will not be going anyway fast:
Another person benefiting from Wonga.coms success is venture capitalist Adrian Beecroft, a major donor to the Tory party, having handed over £593,000 since David Cameron became leader. Mr Beecroft is chairman of Dawn Capital, which has a large stock in Wonga Group. Latest accounts show the company, which is now worth £384m, was worth a mere £17m in December 2010.
I don't know about anyone else, but I'm a bit at all the people rushing to the defense of the payday loan companies and the named one in particular. Really?
This story isn't about denying people in temporary (or perpetual) money problems short term loans, its about offering an alternative without terrible interest and terms and conditions like CPAs. What's not to like? Fair enough, be sceptical whether they will appeal to people or be sufficient, but its hardly "nanny state" or even "nanny church" to offer a less exploitative option. If it works as the church/credit unions want it to, then they will out compete the PLCs - sounds very fair and capitalistic if you are into that kind of thing.
I'm finding it difficult to think of a scenario where resorting to payday loans would ever be preferible to a small loan from a credit union, if access to the latter could be improved.
If you could afford the payday loan, then surely its better to get it at more advantageous rates and terms? And if you are either borderline able to afford it or not able then surely it would be better to go to people who will help you to work out what you can afford, help you manage your money by encouraging you to save and direct you to sources of free, independent money advice if you are struggling - as opposed to going to people who will encourage you to borrow money at high interest rates and be pursued for it through continuous payment authorities, etc. People who want you to make them as much money as possible.
There is also the problem that advertising such freely available credit, will encourage people to take out loans they don't really need, for things they don't really need, to act impulsively to buy things which aren't really essential. I really doubt that all the people who take out payday loans would otherwise have gone to loan sharks. My friend, who got married this month, took one out to pay for little bits and pieces for the wedding. I am certain that if pay day loans weren't available, she either would have done without these things, planned and budgetted for these things earlier, or borrowed from her parents who were funding other aspects of the wedding.
I was worried about her when she told me, as I hadn't realised things were so tight. So, she's got to find that £500 that she couldn't find this month, and £70 on top of that to pay for the privelage of spending the money a few weeks before she had the money too.
Goodness knows what the long term affects of these little extras will be.
I realise other people borrow the money for essentials such as car repairs, bills etc, but surely that suggests they are even less able to afford it.
Wonga do roll, which skews the figures, but they also refuse more applicants than other payday loan companies. They refuse the most desperate people...
I worked as a volunteer credit officer for a credit union and it helped a lot of people. Sadly it collapsed as too many people did not pay back their loans when the financial crisis hit and people lost their jobs. A few other credit unions failed after the financial crisis. I think Justine Welby is right to talk about this but I wonder in reality how viable a church credit union would be?
In my experience, many people on benefits came in and asked for loans after months of being charged unauthorised overdraft fees by banks. Truth was many were in debt only because of a bit of bad luck and spiralling bank charges.
PDL often advertise they are cheaper than getting an unauthorised overdraft - that is true.
Perhaps Justin Welby might also need to talk about unfair bank charges.
I agree with him, although as others have said I'm not sure how viable the whole idea is.
Something else that could be targeted is the fact that people with those top-up cards pay twice as much for their energy as the rest of us. That's just purely picking on poor people, surely? The idea of pay-as-you-go energy is not in itself a bad idea as it could help people budget (please correct me if I am wrong on this) but why is the rate so much higher?
I think it's right for the church to speak out on such issues.
Wonga are a company who prey on the stupidity of people who are financially inept in the same way that bookmakers prey on the stupidity of gamblers.
If you say that some people need a short term loan in an emergency, that argument doesn't hold water.....it will still have to be paid back, plus the ridiculous interest rate. The maximum loan is only £1k so anyone with any brains would save a few quid each week to put by for any emergencies.
There are a lot of thick and irresponsible people out there who live beyond their means. Come on, they crack on they're skint but have an arm full of tattoos, smoke, drink, then get a pay day loan out to pay for their Sky and broadband package.
Wongas business model assumes a 50% default rate ( according to radio 4). The default is then rolled over and recovered later - as others have said, as the first call on an credit funds thereafter. The model perpetuates the borrowers' misery and despair.
I actually cheered out loud when I heard what the archbishop had said - this single statement shows how relevant he wants to make the church during his term of office. If his initiative can save even a few families from these financial traps, it will be a good days work.
The church has actually invested in a company that has invested in Wonga. Oooops
Church in Hypocrisy Shocker
And one of its major investors is also a major Conservative party donor (£500,000+).
'Loan sharks are a different kettle of fish' - Justin Welby on the Today prog.
He was making a serious point, that if you ban stratospherically high interest rates, payday lenders may shrug their shoulders and move on to do business elsewhere, leaving the desperate easy prey for loan sharks.
Rob, plenty of people on this country are struggling in the economic downturn. Plenty of people have less than they need to live on and are turning to food banks because they don't have enough left after paying rent/bills/transport to minimum wage/zero hours contract jobs. Plenty of people have no hope of saving anything, and have already run through any savings they built up before their employer went bust or laid people off.
If you aren't in their shoes, count yourself lucky. All it takes is one serious accident or being unfortunate enough to develop a serious illness, or your employer going bust, and you might join their number.
That's why he was suggesting the church should help credit unions, co-operatives that lend money at reasonable rates.
The government has abolished the Social Fund that gave people on benefits access to short term loans in an emergency - if your cooker breaks down, for instance, or your water pipes develop a leak, or there's a fire and all your furniture is lost - even Rob would realise you need to replace your children's beds, I hope.
Would love to have seen the look on Justin Welby's face when he was told the CofE are an indirect investor or Wonga.
Think someone in the banks Ethical investment department might have to pray for forgiveness today.. or at least pray he still has a job.!
Yy, edam, the removal of Social Fund loans - which presumably had an almost 100% payback rate - is a huge bonus for Wonga and their ilk.
Think someone in the banks Ethical investment department might have to pray for forgiveness today.. or at least pray he still has a job
Rendering mammon unto God is a difficult circle to square.
As for the church being an indirect investor in Wonga, I suspect any of us paying into a pension scheme will have all sorts of investments that we might not approve of in the cold light of day. And the church has several thousand employees and many retired staff to support through its pension schemes. There are many different funds who own companies who invest in schemes that fund other firms, etc. etc.
At least the church is pointing out the problems of Wonga and planning to provide an alternative through the credit unions.
But they have people specifically responsible for checking out the ethics of all their investments Rosieres - someone or many people made some bad decisions on that, and I don't think anything you've said really excuses that fact
(ie yes, they have pensions to provide, but surely can also do so ethically?)
Edam. If someone is desperate for a couple of hundred pounds then borrowing it off Wonga and paying back £250 after 2 months to me is a ridiculous way to run your financial affairs.
The point being that if someone can afford to service a pay day loan that carries several thousand % interest, then they can save a few quid in the first place that equates to the interest alone. The sob story about circumstances people find themselves in can surely only be made worse by a very expensive short term loan....it's financial suicide.
By your reasoning, Rob, no one would ever need loans from any source, because they'd just save up.
Unfortunately there's no law in life that says the car can't fail it's MOT until you've saved up from repairing the boiler.
And yes of course it's highly inefficient to borrow and pay interest.
So much more efficient to be well-off in the first place and just write a cheque for both the boiler and the MOT. Being rich is generally a wonderful way to run your financial affairs! You can get so many things so much cheaper.
(There is no apostrophe in "its MOT". That was merely an optical illusion. It didn't happen.)
Rob - the majority of people who use Payday loans do not pay thousands in APR, they simply pay it back a few days or weeks later when they are due at a cost far cheaper than any bank.
£100 wonga over 2 day = £107
£10 over your overdraft at a bank for 2 days = £25 to £50 charges.
I don't know how anyone can defend these loan companies. They are taking advantage of desperate people in the same way old fashioned loan sharks did.
Rhino if you borrow £100 from Wonga for a month then you pay £42.43 to them for that. Not far half off what you borrowed.
If you have an authorised overdraft, then the charges are considerably less. Moneysupermarket have a table showing the charges for up to £500 overdrawn. Halifax is the most expensive on one of their accounts at £25 for the month, but most banks come in at under £10 - so very significantly less than Wonga.
I am not trying to defend them. The 42.43 you quote is for 35 days, thats not how they should be used. If you look at true short term ( less than 10 days) then they are cheaper than the banks.
Bank overdraft fees may be £25 for the month, its the massive fees the banks charge for going over your agreed limit, even £5 over your agreed limit will incur a minimum charge of £25 ( £25 per day in some cases). Obviously it is not advisable to go over your limit but hey thats life people do, the fines for going slightly over are completely disproportionate to any cost that banks may incur.
Rhino - agree that disproportionate overdraft fees are wrong too.
The best thing would be to better educate people about managing their finances. The lower your income the more careful you have to be about managing, but people of all incomes could do with education. My preferred solution would be to see a domestic financial management module taught at schools. Unless you have clued up parents who pass on their wisdom, it is possible to be unleashed on society at 18 utterly clueless as to how to manage your finances.
Maybe I should do a Jamie Oliver and start a campaign about it, like he did about food & school lunches!
Completely agree with PostBell. Until schools start teaching children about managing finances, then the situation will only get worse. Schools should not only be about traditional academic subjects, but about teaching children life skills required when they leave education
Can they help get rid of all of them??
Wonga, Quick Quid, Cheque Centre...
And then all of these random ones like "Cash on your House/ Car/ Dog/ Child" etc...
F* them all. They prey on the vulnerable and they bloody well know it. Scum of the Earth.
This isn't a job for the Church of England, this is a job for government.
I wonder if having a Credit Union account which is held on church premises, will satisfy the church attendance requirement for faith schools?
I think it's a great idea for the church to help with credit unions, especially with an ABC from the financial sector, but it is something the Govt should be doing.
Basically Wonga and their like are a free way of getting rid of loan sharks, getting the police involved to break up organised crime is expensive, letting fat cats profit from the poor is a very Tory way of doing things. It may be slightly better than people getting their kneecaps broken for not paying, but only slightly.
My worry with the C of E getting involved is that this ABC is looking for any way to increase their powers and influence. Here's a little loan, and is Jesus in your life? I mean yes, it's the C of E, not some extremists, but I still think you have to be aware and keep an eye on them. I wouldn't be so bothered if they were disestablished, no bishops in HOL, had no influence in schools, and there was no such thing as a faith school. But, especially after the revelation that the C of E is going to be allowed to take over many currently non-denominational (not secular, as this is not allowed in this country) schools it does make me more cautious.
However, at the same time it did piss me off that the agenda suddenly went from focusing on Wonga and their like and how evil they are compared with credit unions, to how evil the church apparently is for having a very minor investment in Wonga themselves.
I was listening to Radio 4 this morning and Justin Welby was being interviewed. It did annoy me that a majority of the interview was about the ethics of investing rather than what the church is trying to achieve.
Eventually the interview came round to talking about what the church was doing.
Yes, I agree. An interesting chat all the same. The ABC is a consummate politician though, not like the highly educated, very nice and well meaning but naive bumblers they've had in the post before.
I am with this organisation www.ansarfinance.com/#!how-it-works/c1ger
They do not charge interest on loans but of course have procedures in place where they ensure that people are able to pay back loans. Don't know if this will help someone, but for what its worth, I have been with this company for a number of years and donate £10 a month which goes towards lending out money for small loans interest free.
They also used to have a similar home finance scheme but unfortunately that is at a standstill at the moment as there isn't enough investment to keep that one going.
I realise that it is a company based on islamic concepts, but I am certain it is open to all. Hope the link helps someone.
i have also recently started with them blue.
Hi crescent, I have been with them for a number of years and basically donate £10 so that it can help those in need of a loan and also because one day I may also need a small loan.
That's the sort of thing I was wondering about upthread. Thanks!
Rhino71, you've accidentally hit on one of my bug bears there. "You teach a kid life skills for when they leave education".....trouble is, the majority of teachers have never left education themselves so what life skills outside education do the teachers know about ?
I've been to parents evening to see teachers who act like teenagers. One doodled little pictures on her note pad as she spoke to us, never looking up at us once. I've worked in many schools (not as a teacher) and most of the teachers are incredibly disorganised and shoddy in how they communicate and their general housekeeping.......is it any wonder the younger generation can't save......they only know Cash Converters and Wonga !
Needaholidaynow, it's hardly the fault of Wonga....the problem is with the retarded scroats who are low paid or don't work but they want another tattoo, latest mobile, Ugg boots, 90 inch flat screen TV and dope....they are not prepared to do without luxuries that they can't afford and Wonga is the only place that will lend them cash.
I live in Salford and I see examples of this on a daily basis. Tell me how unemployed men with a council house and kids can afford a £700 tattoo.....there's no such thing as poverty in this country, just people who spend their handouts on luxuries instead of the important things.
There is real poverty in this country that isn't attributable to widescreen goats. Many of those suffering have been hit by change of circumstances leaving a financial gap that they can never plug (eg lose job, benefits delayed, borrow money to feed children, use whole of first JSA payment to service debt, borrow again to feed children again...).
If you lose your job and you're in social housing, the benefits system picks up housing costs and gives handouts.
If you own your home and lose your job.....sell your home.
Worst case scenario....camp out on the council steps overnight and they'll sort you out in a heartbeat.
A good rule of thumb is that when you have a job, strive to save up at least the equivalent of 3 months wages as a small safety net just in case, or more if you're more risk averse.
Either way, people who can afford the interest payments on payday loans, no matter if it's short term or not, are not, in my opinion, in real poverty.......It's a complete contradiction.
"A good rule of thumb is that when you have a job, strive to save up at least the equivalent of 3 months wages as a small safety net just in case, or more if you're more risk averse"
Easier said than done - especially in today's expensive society.
::bangs head on wall::
So there's never a gap in payments?
And it never happens that someone's boiler dies in the same week as the rent falls?
These days, having the equivalent of three months' earnings in savings is ... well, s very luxurious position.
"Either way, people who can afford the interest payments on payday loans, no matter if it's short term or not, are not, in my opinion, in real poverty.......It's a complete contradiction."
Do you think so? When they need money for food or to pay the utility bills, do you think they say I can't afford the interest so I won't take the money they are offering me? I'll just starve instead or have my fuel cut off.
According to the ONS,
"The top 10% of households are now 850 times wealthier than the bottom 10%, the ONS said. It also revealed that half of UK households have just £400 in net cash at hand , compared to the £123,200 in cash balances typically held by the top 10% of households."
HSBC both charge at least £25/day
HSBCs fees are nowhere near that amount. Where do people get their 'info' from?
rob, you're in cloud cuckoo land.
Last year ATOS fucked up my medical assessment - and admitted this. Nonetheless I spent 12 months on half-pay ESA/incapacity and 5 months on zero ESA.
If I hadn't had friends and family as a backstop, I would have been up shit creek.
Incidentally, I had a lot more than 3 months' savings when I first became ill - more than 5 years ago.
BTW, if you genuinely know that men with no income other than unemployment and family benefits are diverting £700 to pay for a tattoo, I think the UK's real poverty is right there under your nose.
Their children are not exactly going to be having new shoes or proper food, are they?
I too think it will be a struggle but at least the right direction. Wonga et al are immoral to the extreme.
I wonder if a lot of churches could work them in with the foodbanks and debt advice centres they already run, and have something more holistic going on to help the most vulnerable.
Do hope something can get off the ground. Good on Justin.
I quite liked his kind of apology today too - where he said he was embarrassed and irritated I think - anyway came over as quite human I thought ?
How ethical can you be? But he did sound like he wanted to do something for society and that's good.
These discussions are always interesting IMHO. The irony of those justifying the need to borrow from Wonga is amazing.
I'm with Rob on this essentially as there is rarely any genuine need to use these companies. I hear all the 'boiler' this and 'food' that but none of it alters the fact that poor people should not borrow money they cannot pay back.
If you are hungry and don't have any money till benefits come in then you have two choices. Go hungry or borrow money that will result in you repeating the same exercise next month (but worse due to extra interest payments). It's the same as the overdraft that never gets paid back because you still need the same amount of money to live on every month.
So the boiler goes. Be bloody cold for a week till you can afford to fix it. I grew up in a council house with no central heating and rattly windows. We had no boiler and no heating other than a fireplace in the lounge. We were cold, as was everyone else on our estate so being cold in winter was a part of life. I'm sure people can go 7 days without heat.
The trouble is, no-one has the upper lip to wait nowadays so fool themselves into needing a pay day loan.
It would be interesting to hear the reasons why people borrow such money from such lenders.
I would imagine there's a whole range of reasons - ranging from the people who are desperate for cash to those who just want a night out and will take the hit now.
Credit is far far too easy to obtain. It's helped drive our economy but has left us in an economic mess and left a lot of people struggling to pay it off. Many people are also financially illiterate and don't understand how credit and compound interest works.
Some do but just want it. We are in a culture where we are bombarded with messages and imagery everyday about how to spend our money and what lifestyle we should aspire to. Get it on credit and pay later.
The CofE should be addressing that culture as well.
But if you are hungry or desperate for money, you can see why Wonga is attractive. And there are so many of these companies now. Is it a coincedence that as the recession and credit crunch started, we saw a boom in such lending?
I don't think some people have any idea what it's like to be poor.
I don't think I do really (though I've often had little disposable income but usually some options better than Wonga if desperate)
- But I have a better imagination than some.
I've struggled for money - but I've always been able to get work due to my education, the bank has given me an account and I've been able to get credit - not sure if that's a good or bad thing but it has helped.
If I was unable to get such stuff, life would be very hard. But I know that it just takes one accident or illness and I am in very deep trouble.
Borrowing money is a problem that is not exclusive to the lower end of the market i.e. Wonga.
It wasn't that long ago that you were only really allowed one credit card where the limit was set to roughly one months wages, not an average annual salary (yes I've had a card with a £25k limit in the past!).
Borrowing is false economy, both in the literal sense and the UK economy. The sooner we all realise it's a bad thing the sooner the market need will dwindle and the companies will too. While there is a need these companies will flourish and let's not fool ourselves that high street banks are any less immoral. They are essentially all the same and charge the highest rates that they can get away with.
Yes, high street banks are unscrupulous these days too.
I don't rate their advice to small businesses - I think they just reckon anyone with a small business is working for them !
And they encourage ignorance and lack of information as it makes them more money eg. "We like to save paper where we can" so would prefer not to give you a tiny scrap of paper with your balance details at the ATM machine. Really ?
Then they send you shitty letters when you are overdrawn - and actually giving them more business. How about "Thank you for going beyond your over-draft limit this month, the charge for this will be ...." ?
When you really need money they don't care and won't help eg. offer larger over-draft when you have plenty coming in, but refuse when you need it.
I'd like to see the Church put some of its money into person-to-person lending. This challenges the monopoly of the banks. More details here www.money.co.uk/loans/social-lending-sites.htm
Perhaps I should contact the archbishop suggesting that he set up a person-to-person lending scheme that offers smaller loans? It's unlicensed so the church could do it.
wiki entry en.wikipedia.org/wiki/Peer-to-peer_lending and money saving expert guide here www.moneysavingexpert.com/loans/cheap-personal-loans#tool
Please note I've not borrowed from these companies so no personal recommendation
Techno, I hear what you are saying but if someone has no food and a family to feed then Wonga et al might seem an attractive option. I hope with the rise in food banks though that there is now an alternative.
I can't believe that no-one has pointed out this significant ecumenical matter.
What amuses me is that apparently the CofE has actually invested in Wonga.
Kim147. The problem lies with consumerism and the fact that people are not prepared to do without their luxury items. All these poor people who's "boiler blows up" or "can't pay their utility bills", do they have a mobile phone that costs them £20, £30, £40 a month? Do they have broadband? Do they have a car?
If the boiler blows up, do what they did in 1750.....have a cold bath and light a fire.
Horry If there is a gap in payments then your financial housekeeping is at fault......no matter how little you get in wages or handouts, you should save a percentage of it and if that means dumping your mobile, broadband, car, boiler or whatever you may regard as an essential, then you must do it otherwise there is no legitimate excuse in my opinion.
Rob, upthread someone had an eight-month payment gap. Nobody can bridge that with a three-month savings pot.
And having a phone contract that you might have taken out 18 months ago doesn't cease to be a commitment just because your income drops. Even dropping to the lowest possible tariff may take time or incur charges, or indeed not make enough difference.
Now I agree with you that there are plenty of
fuckwits people around who overspend on extravagant non-essentials even when they can't afford them, and claim poverty, but that doesn't then mean that poverty doesn't exist in this country.
That was your assertion upthread - that there is no true poverty in this country, only fecklessness and poor planning. Which is not only demonstrably untrue, but a deeply insensitive and unhelpful remark.
It's not often that the thought occurs to me that it would probably be a good thing if someone lost their job or got a wasting disease, Rob.
You have a point. People do like their luxury items,
like shoes and food. No, seriously, you do have a point. And cold baths are good for you. It's just that you are making all these judgements, without, it seems, having any idea of what people do actually go through. That's what annoys me.
It's like when Michael Portillo tried to live on a tiny amount of money for a week or a month, ages ago, just to prove that he could live on benefits. A week. Or a month. With all his education and energy and ruddy good health, and fired with the desire to prove a point ...
Or when someone looks after a couple of kids for a day and thinks it's easy.
At first I thought great.Then I heard that the C of E has 8 billion quid and invests...in companies that have no more than a 25% interest in weapons...10% in high interest laon companies such as Wonga and no more than 2% interest in Pornography...so am now not remotely interested in this.Utterly depressing.
Horry. I take your point and I like how you put it.
When it comes to Wonga and co, what % of people who use them are the feckless and financially irresponsible ? I'd hazard a guess that it's a large chunk.
There may be people who have genuinely fallen on hard times but if it wasn't for the thousands of feckless morons who Wonga feed on, there would be no Wonga's.
Some people try and cover all base's though. For instance, I'm lucky enough/anal enough/sad enough/organised enough to have 2 years wages saved up. It's taken me years. If I was starting over, I'd do without an 18 month phone contract until I'd saved a decent safety net.
As for poverty....I live near a huge Council estate. There are big, fat lazy bastards on there who have never worked, have a new car on motability, free dental, housing, cheap council tax etc etc. I install fibre broadband in their houses on a daily basis. They all have Sky TV, widescreen telly, cream leather settees, 3 dogs, 5 cats, parrots.
My wife and I work full time, we've not been burgled for 12 years because the scroats on the estate up the road have got better stuff than we've got !
What exactly is your definition of poverty ?
My definition of poverty includes missing meals to pay the gas bill.
Ironically I think in many cases the "long term poor" do end up appearing well off, and the "temporarily poor" (long term employed but factory suddenly closes, or sudden disability/illness, etc) are the ones who fall through the net and end up taking drastic steps.
You say you wouldn't take a long phone contract until you were comfortably off. You may not be aware that long contracts are much cheaper per month than shorter ones (both per month and in some cases in total). Mine is £7.50 pcm, for example. I made the prudent financial decision not to have an iPhone (from £35pcm) You will note that £7.50pcm is less than fixed line rental costs. Nowadays a phone is considered essential - for contact by official agencies such as DCs' school, doctors, etc, and in many cases a cheap contract is the cheapest way to achieve this.
If they 'have a new car on motability' then they are paying for it from their DLA which they get due to having a profound disability.
And yet they are 'fat lazy bastards who never worked?'
thebody It would be stupid for the church to sell off its properties. They act as collaterol for the many, many things that it finances, plus the most expensive buildings have restrictions on use that means very few (except National Trust maybe) would want to buy them. You don't sell off your capital for short term cashflow.
It will be interesting to see how this actually pans out. The church does already run things like supported housing and schools so will have mechanisms for helping people who get into debt. Good point about learning from the Islamic model Grimma
Agree it's good to see some up to date social response from the church (assuming it doesn't take a decade to enact )
I temped as an accountant for the church for a year so got an interesting insight into their finances
"If they 'have a new car on motability' then they are paying for it from their DLA which they get due to having a profound disability.
And yet they are 'fat lazy bastards who never worked?'
This is Salford, not Berkshire, a lot of people tell lies or manipulate/exaggerate here to get a new car on motability. Morbid obesity may or may not be considered a profound disability albeit self-inficted.
Rob, it really isn't easy to get the level of DLA which includes access to motability. There are a million hoops to jump through, and medical professionals from gp to consultant have to give written statements about your condition.
If someone can get onto motability, then they are profoundly disabled. Maybe not by your lights, but you have no knowledge of medical their condition or how it affects them. Are you a medical professional who has examined them minutely, and has had years of experience and knowledge of them and their condition? Have you spent years at University to gain your 3 degrees, have you worked 70+ hours a week on the wards for several years gaining experience?
Rather than being a telecoms engineer with expertise in that field?
Rob, a good test to find out whether someone is employable or not is to ask yourself if you would employ them. If you wouldn't, why would you expect someone else to? And if they are not going to be able to get a job (no matter how many application forms they fill in), how do you expect them to live without claiming benefits?
Nobody is denying that some people tell lies, btw. Including some very rich owners of multi-national companies and some politicians. But it's usually a very small minority, imo.
Anyway, isn't this a bit of a hijack of this thread?
My Dad has a motability car and he's minted. As does an IT consultant at my work who is on at least £40k a year. You get a new car every 3 years I think and your insurance paid by the state.
Both are genuinely disabled but I do think that there needs to be a review to see if people can afford to pay themselves. Much as I love my Dad (and the fact it is bulking up my inheritance) I really don't see why the state should pay for that but refuse housing benefit to someone who's been made redundant because they have a box room.
It's rather patronising too, it assumes the disabled are helpless little souls with no ability to provide for themselves. When in fact they are often highly successful people with good jobs.
DLA is not an out of work benefit, and is not means tested. It is to contribute to the additional costs incurred by being disabled, and Shiney Dave claimed it for Ivan.
There's a legitimate discussion to be had about non-means-tested benefits like DLA, winter fuel allowance, basic state pension, and child benefit (which of course has just been made crudely means-tested).
Should the welfare state and NHS be something we almost all contribute to and almost all benefit from? Or should we go for the third-world or Victorian model, where the middle pay taxes but get almost nothing and the very poor get haphazard help?
I think this is an excellent idea and am impressed to see the church actually trying to do something useful for a change. these firms target vulnerable people who should simply stay in for a month and not buy anything unecessary like I would if I was short of a couple of hundred quid one month until they'd caught up in themeselves - not just expect to be able to carry on regardless. did we learn nothing from the sun-prime lending debacle in the US and all it's fallout?
apart from that, anyone that can get rid a a company tht calls itself wonga and has the most irritating adverts on tv deserves praise for that alone.
can't see it working though. and as others have said, the high street banks are little better.
Wonga is a company that trades as a result of the society we now live in. Thousands of feckless people that want stuff today, can't afford it and will go to whoever is prepared to risk lending them cash. Companies like Wonga fill that void and charge ridiculous interest to offset the risk.
I don't think the Church should get involved. The problem is with society and consumerism, if it is indeed a problem. Our society/economy is based on profit/greed/stuff/commercialism/capitalism......what did you expect would happen?
rob, I have only used a payday lender once and it was when my marriage broke down. I left with nothing and had a child to feed. There was nothing consumer driven about my use of the company at all.....or feckless come to that.
I haf a child to feed
I had nothing
I didnt know how to begin an application for benefits at that point having never claimed them.
I didn't know where else to go.
With the benefit of hindsight I now know that there were other aavenues open to me. At the time though it seemed there was nothing..
Excuse typos...on phone!
I am certain some people DO use thrse companies recklessly but many do not.
The church is involved...investing in companies that pedal weapons,companies like Wonga and Pornography...see earlier post
Jakebullet, I was generalising a bit. However, your first port of call was a payday lender, not CAB. This is it, with their popularity and aggressive advertising, they are the first option that springs to people's mind as a solution. I suppose one persons definition of reckless is different to someone else's......several thousand % APR, no matter how short the loan is over, is a reckless investment.
Doobydoo.....Ok, it should uninvolve itself.
Payday loans are just legalised loan sharks. They need stamping out.
I think at that point I was not really thinking clearly. I do recall going to a CAB but it being several days before th could see me in the town I had gone to. I do agree with you about the consumer driven society though, as a society we are very materialistic, the latest of this, that and the other in any way we can get it.
As life settled I now know there were lots of other avenues but at the time I was clueless.
Not read the thread, but they rather have egg on their faces now don't they!!!! Can't say i am overly surprised that their business dealings were less than scrupulous, although i nearly choked on my drink when I heard their representative trying to justify it by saying that "business isn't black and white, it can be several shades of grey" How many shades would that be? hmmmm 50??? That wouldn't surprise me either - I have had an experience that has shattered my faith in the CoE to the very core - i could never repeat and quite frankly would rather forget it, but you now how these things are, they play on your mind
and drive you slowly mad I could never trust that particular church again. I am not talking at a local level, a village vicar is just that. I am a catholic - and i am grateful for that now.
rob99 - you are talking utter shit!
Am sure the millions of people persecuted by the Catholic church now and over hundreds of years agree with you!....what an odd thing to say LEM
Well, it was an odd thing to happen, based on personal experience.
I think the idea of the church replacing Wonga and the like was a good thing and shows that at least someone is prepared to at least try and drag the reputation of the CofE off the very large fence it seems to have been residing on recently.
I'm just very cynical about how far he can take without becoming the equivalent of 'this turbulent priest' and getting the 21st century version of Beckett's treatment... Justin Welby really doesn't seem like the type to just be a figurehead and is bound to get up a variey of noses in his time as Archbishop I feel.
I rather like him...
TBF to the Archbishop, the fund invested in a fund. That fund invested some money in Wonga.
He raised an interesting question - say they invest in the Daily Express. The Daily Express is owned by Richard Desmond who has interests in pornography.
Or they invest in engineering / IT - but then the company sells some of its technology to the defence industry.
What point does it become unethical?
I am grateful he has brought up these issues about poverty. I just wish the problem didn't exist in the first place.
Message withdrawn at poster's request.
oh actually, scrap my last comment i'll get it deleted, i meant the business representative. Not the archbishops.
Didn't Thatcher have a go at Robert Runcie for his social views?
I've only read various bits about and by him Lem, I've only seen him actually speak once and he didn't come across as too bad. Didn't see him speaking about this as have been not watching tv much recently.
You're right, it shouldn't be the church that gets involved but if the government can't or won't, whether its way down on the priority list or they're hamstrung by law, if the church can do something then I think it should.
kim thats an issue isn't it? So many companies have interests in each other and fingers in so many pies somewhere along the line there will be something that comes back and bites them.
I bank with an ethical bank. But I bet if you looked at their investments and dug deeper, you'd see issues.
Especially when you invest in large pension funds who then fund other companies.
The c of e should not be investing ....goes against the bible etc etc
Should not be investing in anything?
Or unethical things?
Investing in green technology, regeneration programmes, house building. social housing etc.
LEMisdisappointed.... "Not read this thread"......
"rob99 - you are talking utter shit!"
Were you just guessing then ?
must have been but it would appear i guessed correctly
My financial situation and life experiences would suggest that you guessed incorrectly......unless you have any information I'm unaware of to back up your claim.
Rob, you have had some pretty strong views on this, which is fine, we all have an opinion but you haven't really come across very well to be fair.
That's polite Rhino, and I'm on the warpath
What bit didn't I come across very well ?
Just reading back through a few of your posts and I do actually agree with a lot you say.. BUT.. There are also a lot of sweeping statements and generalising about people on benefits and disabilities... And it's not always possible for people to 'save' for a rainy day.. Not even £1 sometimes.
Fair point....but how does someone who is unable to save £1 afford to pay £73 in interest on a £200 loan with Wonga over just 33 days ?
I've just got those figures off the Wonga site.
I know there are genuine cases of disability, obviously, but the numbers of people fiddling the system, feigning back problems, screwing the welfare in my City is obvious to me because I visit them every day. And if I'm accused of not knowing their exact circumstances then in some cases I maybe jumping to the wrong conclusions, but not in every house.
BTW, on getting an appointment with the CAB. You need to go there to book an appointment on a specified day of the week. You then ask for an appointment, and if you get one, you come back at the allotted time, for a screening interview. You then have to come back again for an actual session to resolve your issue. Not conducive to someone desperate for money to feed their child I fear.
How does someone who hasn't even got a tenner for food get a £200 loan plus the £73 interest from Wonga and manage to balance their books.
I mentioned CAB but surely there are other alternatives as the Wonga thing surely can't be a choice at all in your scenario due to the prohibitive interest rates alone. Just the interest alone of £73 could probably feed an adult and child for 33 days so how could someone so hard up afford to pay this back?
That's how CAB works where I live. And you can spend all day from nine to five waiting for housing benefit advice. It isn't always practical with an older baby / toddler.
I remember the glorious days when social fund loans were available having to do that. The shutters went down, the cheques were printed, the staff all had tea and cake and laughed and deigned to give them to everyone waiting at 4.59 exactly knowing full well that the post-office downstairs closed at five.
It was a bitter race and I didn't make it, didn't have a chance with a pushchair. Yet another week spent in February below-zero temperatures with no food for me because I had been counting on that LOAN (that I would pay back FGS) to secure a person to mend the boiler in the house I had been trying to sell since that famous September 11th before when the market went dead for ages.
I was quite lucky though because someone from the DWP gave me very sensible advice about keeping DD warm. I should move her cot in front of the electric oven, turn it up full blast, open the oven door and leave her to it. She was eighteen months old and climbing out of her cot regularly.
Did you ever do a stint at the DWP Rob?
No, but I don't see how Wonga could ever be considered a viable option given the cost of a loan.
For the record, I deplore Wonga / Brighthouse / Provident - my sister has been with the Provy for YEARS, whether in work or on benefits. They pile the pressure on towards the end of the contract and she falls for it every time. She even feels grateful to them because they give her money upfront when nobody else will and feels the same about catalogues which let her buy school uniform in advance at a stupid APR.
DH and I are both carers now but he used to earn £50k+ and it is so much more expensive to have a small fixed income for many reasons.
I can see the need for very short-term loans especially now that unauthorised overdrafts are crippling people and that so many gaps in the benefit system are widening due to welfare reform.
I think your profound and wide-ranging ignorance is the bit that's not coming across well, rob.
Not about detailed technicalities of how the DWP works.
But statements like, " do what they did in 1750.....have a cold bath and light a fire."
And this from someone from Salford, too.
It may come as a shock to you to learn that, even in 1750, fires cost money because you had to buy coal. Those with no income used pawn shops as their Wonga. When they ran out of things to pawn, they died. In their thousands in the C19th.
The Manchester area 1750-1850 has particularly good records so we can track very closely the link between poverty and mortality. It also has its own narrator, Elizabeth Gaskell. In fact I've just re-read the chapter entitled "Poverty and Death" in Mary Barton.
The other way you're not coming across well is that people keep explaining to you, in simple words with clear examples, that things like Wonga act as expensive bridging loans to cover the gap when income is delayed. And you keep clutching your head and saying, "But I don't understand!"
So it doesn't really make you look too quick on the uptake.
You are right that the interest charged by Wonga is horrendously painful, and causes suffering to pay back.
Why are you having such extreme difficulty understanding that, despite that suffering, for some people it is lesser suffering than not being able to keep the baby warm and fed for a week?
Or are you one of these people who fervently believes that No One In Britain Is Poor, all up to our trotters in the gravy train as we are? And when presented with evidence to the contrary, just can't cope?
BTW, rob, I get DLA. I could spend it on a motability car, but I'm not safe to drive. I'm not even safe to drive a mobility scooter for more than about an hour, which is a bugger and keeps me housebound.
But if you came to my house for 20 mins you would have no idea of that. You'd see gadgets bought by my partner who works, and assume I was getting rich by "screwing the welfare". And I'd become another little tale in Rob's narrative of welfare scroungers taking over Britain.
Pah. Don't know why I'm wasting my time saying any of this. Don't think it's even going in the one ear.
"How does someone who hasn't even got a tenner for food get a £200 loan plus the £73 interest from Wonga and manage to balance their books. " Well, they don't do they - becuase they end up having to borrow it again and again, that is how these sharks make their money! But to suggest that people who find themselves in a situation where they need to do this are feckless is where you do yourself a disservice. We have been in a situation with NO money for food, electric, anything - not through fecklessness, just circumstance - it was thankfully temporary. However we were LUCKY enough to be able to borrow from family and pay back when we can afford it with no interest. Had we not had that option, I am not sure we would have had any other alternative. We are not on benefits.
Wonga says it has a low default rate.
Is that because people who would normally default end up taking out a loan to repay the first one?
I suspect you are right there kim. whether from wonga or another shark.
Why are you having such extreme difficulty understanding that, despite that suffering, for some people it is lesser suffering than not being able to keep the baby warm and fed for a week?
It's not rocket science is it and even really poor people can understand repayment figures. You are equally doing poor/needy people a disservice.
If you don't have any money and are on a tight budget then it is really quite simple as you just don't borrow money that will attract an unservicable level of interest (even if you do pay it back on time).
My mum had to feed us all on pittance and as such never borrowed a penny off anyone. She did this simply because her £10-15 food budget would not be able to suffer loan shark interest levels and all the hassle that would ensue when she was unable to pay back the money.
Thus when we were short we simply didn't eat. When we were cold we stayed cold.
Really, what is the point in borrowing money and putting next weeks/months budget in deficit + interest and then repeating the same process again? If you go hungry/cold you not only learn something but also stem the perpetual debt/deficit cycle.
If used 'correctly' I feel that there is a place for Wonga and co.
We are by no means on the breadline but we used them a couple of months ago...we borrowed £200 for a week. Can't remember exactly but the interest was fairly low. I do have family I could borrow off but I preferred to use a company.
It covered us for the last week before payday after a horrendous month where we had to pay out £500 for car repairs,car tax was due same month of over £100, plus the fees were due for the kids swimming lessons of £100 (please no snotty comments about priorities as that IS a priority for us). It took all of our disposable income plus some and using wonga was actually a completely stress free experience.
I feel sorry for people who get stuck in a debt cycle...but there has to be a certain amount of personal responsibility by individuals. Maybe there should be a cap on these companies...such as maximum debt plus interest can only be x% of an individuals in comings....or a commitment by Wonga to cap interest/fees once the debt reaches x% of the amount borrowed for non-payers.
I do not want to see them close though... They do have a place in the market IMO.
PrettyKitty, the interest you paid for that one month would have paid for 3 quarters of the kids swimming fees (kids swimming is important too in my opinion).
Wonga is a for profit company, It's market driven. As long as there is significant demand, they will continue to trade. It's a very very expensive way to borrow money whether it's for one month or however long.
LEM....you've just made the point I made, which is, a lot of people who use Wonga and have to service the huge APR attached to the loan, can easily spiral down where the debt is compounded by the interest and they end up owing £5k on a £500 loan.......It's complete madness.
I'd argue that people who are disciplined enough to borrow off Wonga and pay the loan and interest off very quickly should really be financially aware and smart enough not to use them in the first place....I know there are exceptions and no offence intended but I'm quite sure Wonga wouldn't be a viable business if it weren't for the people who spend months and hundreds/thousands, servicing relatively small loans off them.
Technotropic, I agree with everything you've said. The problem lies with society today and what people regard as essential. I don't believe you need to borrow money for food in this country.
I think you might need to borrow money for food if you have all the mod cons that people now regard as essential. I don't think Wonga could have traded in the seventies but now, the consumerism that exists in society today, is fuelling demand for quick and easy cash.
Technotrobe, what is the longest period you didn't eat anything at all for?
I've just received a lump sum of thousands of pounds from the DWP who didn't pay me for 5 months.
Are you seriously suggesting that I could have survived 5 months with no food?
<waits for derailing-type answer, as T won't be able to answer that>
Ah, but now you've shifted the goalposts. Previously you were talking about a week, hence my quoting your statement.
You clearly have a very different issue and in which case have very different requirements. Wonga is a short term lender so 5 months doesn't fall within their terms of service AFAIK.
That's not derailing. That's responding/commenting on the typical scenarios that have been discussed thus far. If this thread discussed 5 month durations then the nature of it would have been very different. Of course you would need to consider other avenues as one cannot starve for 5 months.
ParsingFancy Fri 26-Jul-13 20:51:58
Last year ATOS fucked up my medical assessment - and admitted this. Nonetheless I spent 12 months on half-pay ESA/incapacity and 5 months on zero ESA.
And there was a subsequent post by someone who would have been unable to feed her baby for a week without a loan.
All of these scenarios have appeared on this thread, and frankly even if they hadn't you would be able to guess they exist. This thread is discussing Wonga and the reasons people might borrow from Wonga, and the possible provision of "other avenues" by the CofE.
Your interest in the thread appears to be simply to turn up and look down your nose at people who might have used Wonga (I haven't, btw) and accuse them of various forms of lack of moral fibre.
Instead of grasping the astonishingly simple fact that sometimes the timing of cash flow does not match the outgoings necessary to keep one alive, healthy, housed, and in a job.
BTW, I completely agree that Wonga is hideously expensive, exploitative and can bring further suffering on people who are poor in the first place.
This doesn't make me imagine that everyone who borrows from them must therefore be either stupid or greedy.
Gah. I was right first time. Not even going in one ear.
Financial literacy is shockingly low in this country. I'm glad schools are going someway to addressing that by doing lessons at school.
Compound interests, percentages, APR - the real cost of stuff is not truly understood by many people. Compound interest is frightening.
Rob - we borrowed £200 for a week not a month! It was the last week before payday. I think the interest was in the £10-£15 mark, which, as a true 'one off' is reasonable to me.
I've seen an interview with one of the directors (or similar) of Wonga, and can remember he said the interest on £100 borrowed for a week would be the equivalent of borrowing £100 off a friend for that period and then buying him a couple of drinks on the weekend to say thanks. If Wonga is used 'correctly' then that's an accurate way of looking at it really.
Also would like to add that APRs have little value when discussing short-term loan firms such as Wonga as it is an Annual Percentage Rate.
I really don't see that trying to shut down companies like Wonga is the way to go. Cash for Gold, Pawn Shops, Cash Converters, Buy as You View, Bright House and so many more...they are all (lets be honest) generally aimed at the 'poor people'. All have higher percentage rates for relatively low-value loans. Is the answer really to remove them all ? Or should we just be looking at better regulation and caps on this type of industry?
Shouldn't even the 'poor people' be given enough credit to make decisions for themselves?
I don't look down on people that use Wonga and I've not accused any of their customers of lacking in moral fibre either.
It's simply a case of elementary math for most cases and I would bet that a lot more hard up people, as per your example, do not resort to Wonga et al. Of course there are extreme examples but it is an exercise in futility to resort to Wonga if you know that you're up shit creek without a paddle.
If you're on half measures and will be for the forseeable future then you will know money is going to be tight. Thus money is going to be more important than any other resource you have. In which case you simply do not piss away money on interest repayments and put yourself in a decreasing spiral of poverty.
The logic is incomprehensible.
It's not a lack of moral fibre but definitely a lack of something - hence why these companies are thriving.
I agree. I wouldn't use them but essentially you're right. Use them as intended and you won't get burned.
To borrow £200 for 7 days costs £19.89 with Wonga. That is about 10% of the total amount borrowed. It is still a lot of money for a very short term small loan.
I don't think it is about poor people, I think it is about uneducated people. As I said further up the board, the less money you have the better you need to be able to manage your finances. Unfortunately, there is no domestic finance education done at school, so you are at the mercy of your parents knowledge. If they don't pass on anything useful, young people leave school clueless. This is a ridiculous state of affairs for a first world country in the 21st century. So many debt problems could be avoided by better planning in the first place.
Postbellum you have mentioned something so important! I have been reduced to gnashing my teeth and tearing my hair in frustration trying to work out whether TalkTalk is cheaper than Tiscali, or which energy provider gives a better deal. I wish wish wish that schools would teach our kids how to manage money. Then maybe one of them could teach me ...
... and, as you say, it's even more important the less money you have.
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I agree it's not about poor people, but I'm not entirely sure it's uneducated people - though understanding how compound interest works would make a difference I think. No, it's more about desperate people with nowhere else to go.
No one in our country should be in that position. We are supposed to be civilised.
We are trying to shut the stable door after the horse has bolted. You can't expect everyone to think sensibly about money in that way, if they have nowhere else to turn. If that's your choice - or the alternative is the proverbial man who comes round every week and breaks your legs when you can't pay - then you would go to Wonga, wouldn't you?
My Dad lived and worked in the best of economic times and which had the most social mobility we have ever seen. East-end evacuee one of seven children, practically illiterate, left school at fourteen. Plentiful jobs, never out of work, private (intact) pensions, moved up the housing ladder.
He took 60K out of his house as an equity release seven years ago and wasted it all as far as I can tell because he's still got credit and store cards he's paying off from the eighties and nineties. He won't ring them and say he's a pensioner with one income (mother is in a care home) and renegotiate even though a few are his wife's, and she has no income bar £10 after her care is paid for.
Anyway, he has no idea about compound interest. None. He thinks in twenty years time my sister and I will just pay off the original amount with a few quid on top for the interest and we'll have a nice inheritance. He took it out when house prices were at their peak and the value has gone right down since then. It isn't going to cover it.
But it's not an immediate problem for him and neither is money generally. He hasn't watched Sky in over four years and is still paying fifty pounds p.m for it, too lazy to make the phone call. He also won't consider me helping him claim he was mis-sold the equity release because it would make him look stupid.
It isn't only people in poverty who make daft decisions and yes, desperate times call for desperate measures.
Jux, I think many desperate people wouldn't be desperate if they had a basic understanding of money in the first place. Not all of them, as there will always be that unforeseen crisis, but quite a lot.
I have well educated wealthy friends making similarly unwise decisions to Audrina's Dad. It is all fine while the money is rolling in, but something awful happens and it all goes horribly wrong - when there was no need for it to have gone wrong. Similarly, I work with young people and it frightens me how naïve and clueless they are about money. You can immediately tell the ones whose parents have passed on nuggets of wisdom because the ones whose haven't, literally have no idea how it all works.
Also, we live in such a consumerist, conspicuously consumptive society. People feel that they have to have a ginormous TV, x-box, laptop, ipad, sky tv etc. People will actually get into debt just to have these things. They get themselves into long-term hire purchase agreements, which one at a time don't seem too onerous but before they know it, they've accumulated a lot of them & then their overtime is reduced or hours are cut back or even worse they lose their job & they can't stop repaying all the loans, so money for food gets tight.
I will oput my hand up and admit I am rubbish at dealing with financial issues but partly it's because I am a carer of a severely disabled child, get very little sleep, have had to give up paid employment to care and dealing with finances comes after the care and all the appointments (and sometimes me getting a better night sleep)
If any of you though have any advice, simple advice, on what would make it easier for me to manage I would be very grateful, thanks
I think food is extortionate too. A small trolley full of food now is near to or over £100 - i dread to think what those large trolleys come to (I wont allow myself to have one anymore just incase I have the urge to fill it up!)
Owllady - at its most basic you need to understand exactly what money you have coming in every month and then you work out what goes out each month.
With the outgoings, look at the absolute can't do withouts first, so that is rent/mortgage, council tax, fuel, water & food. Those are the things without which you can't live in your home. Then you look at all the other things.
After you've done that, you can start looking at whether you can reduce any of your expenditure by swapping providers, changing supermarket etc.
MoneySavingExpert www.moneysavingexpert.com is a great website full of lots of great tips on all of this stuff.
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