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to think that a credit loan at 69% APR is verging on the Machievellian?

(22 Posts)
SpeedyGonzalez Thu 09-Jun-11 22:05:16

Anyone else seen the ads for 'Borro'? Very nicely shot lifestyle-type ad promising easy loans in exchange for your long as you're willing to put up with an APR of 69%!!! (they kept that bit to the small print, unsurprisingly hmm...).

I searched for them online to check my facts, and it turns out they're just pawnbrokers...ah, now that makes sense.

discobeaver Thu 09-Jun-11 22:12:31

The apr on Wonga. Com is over 4,000 %

SpeedyGonzalez Thu 09-Jun-11 22:14:47


likale Thu 09-Jun-11 22:15:38

There are companys that gives loans with APRs far higher than 69%

DioneTheDiabolist Thu 09-Jun-11 22:20:12

When I had lived here for a year I got an unsolicited cheque from the Provident for £260.00. I put it straight in the bin. I think the interest was 279%. I don't think the fact that it came towards the end of August was a coincidence. The only dealings I have ever had with them was when their doorstep man had called around the May before, looking for the previous owner.

It's entrapment, exploitation and wrong. I don't understand why they are allowed to get away with preying on the poorest in society.

SoftKittyWarmKitty Thu 09-Jun-11 22:30:37

I saw an ad this morning that was over 5000% APR. I had to look twice but that's what it was - disgraceful. 'Payday Loans' I think it was.

inappa Thu 09-Jun-11 23:41:14

I think the companies have to take into account the risk that lending to the people who need these loans represent. Most if not all have poor credit histories and so in order to protect their margins they have to charge a very high rate of interest.

SpeedyGonzalez Thu 09-Jun-11 23:47:07

Unbelievable. Wow.

Dione - yes, it is appalling.

Inappa - yes, I'm sure that's the case. But they are still taking advantage of poor people.

Credit unions are a much better idea, aren't they? Is there a credit union near any of you?

inappa Thu 09-Jun-11 23:51:01

I don't think they are taking advantage any more then any other loan company, they are just setting their rates in accordance with the risk that they clients have.

inappa Thu 09-Jun-11 23:51:16

Agree with you on credit unions though

chillichill Fri 10-Jun-11 00:14:30

but if someone is that great a risk, should the banks be lending to them in the first place? part of our economic crisis was formed by easy credit and living beyond our means. its irresponsible lending, imo, and it should be stopped.

BigTuna Fri 10-Jun-11 00:25:42

High interest rates on short term loans distort the actual amount you end up paying back. Still they do target those who can't get lower interest rates for whatever reason and if you need the money it's hard to see any other way round it.

AlpinePony Fri 10-Jun-11 08:11:55

Nobody bats an eyelid about borrowing E.g., 300k to buy a house and paying back 700k over the course of the lifetime's mortgage.

When you're desperate borrowing 150 quid and paying back 170 in a fortnight is a god-send.

It's easy to pass judgement on this until you've got no food on the table.

Meglet Fri 10-Jun-11 08:39:45

These people possibly aren't living beyond their means.

Their cooker / washing machine breaks or their DC needs kitting out in new uniform and they don't have the cash for it. A high street bank won't touch them with a barge pole so they end up going to irresponsible lenders who charge a fortune.

microserf Fri 10-Jun-11 09:34:00

I don't think it's Machiavellian (I don't see anything cunning or duplicitous about these loans).

I think it's unfair and unjust that the poorest people in society have to pay RIDICULOUS amounts of interest to get credit, often just to survive. Sorry, this is one of the topics that gets me frothing at the mouth. No one cares about how poor people are exploited in this way. I don't buy the argument that the margins need to be THIS high to protect the lenders either.

DioneTheDiabolist Fri 10-Jun-11 12:27:10

Oh, I think it it extremely cunning to send an unsolicited cheque to a mum living in a deprived area in August. I had decided that DC's shoes and school bag would do him another while, when this cheque arrived and I must admit I was tempted for a second to cash it and buy him new.

Had I been younger and less experienced I would have cashed it and ended up with a very expensive debt that I didn't need or even apply for.

SpeedyGonzalez Fri 10-Jun-11 14:40:00


You're at the end of your tether. You are down to your last £5, with no idea where the money will come for the rest of the month. Your kids barely eat in the school holidays because there are no school meals then, and your rent is 4 months' overdue and counting. Then you see this ad. It's all so easy! Nice ad, nice people, the whole thing is presented as such a pleasant solution to your current woes - hey, at least it'll tide you over for a few months while you get yourself sorted (you hope)!

But at 69%! Or more - according to the products other posters have mentioned. No responsible lender charges that high rate of interest. These people are targetting the poor and the poor alone, luring them in with gold-plated carrots on a stick. That sounds very cunning and duplicitous to me.

Dlamis Fri 10-Jun-11 14:54:33

The first time i saw one of those ads i thought it was a spoof!

Dh calls it 'legalised loan sharking'

Andrewofgg Fri 10-Jun-11 15:03:27

An MP once asked in a debate about controlling interest rates At what rate would you lend a juicy steak to a hungry dog? and while that's unkindly expressed it does set out the problem. Lenders like these experience a lot of default from people whom they can't sue because that would be throwing good money after bad, and also short term lending means high administrative costs - and their rates are set accordingly.

mumblechum1 Fri 10-Jun-11 15:04:35

<pedant alert>

Not Machievellian, surely, but certainly Shylockian.

DS saw one the other day advertising an apr of 1700%!!

Can't believe that can be legal, but apparently it was on a TV ad.

SpeedyGonzalez Fri 10-Jun-11 15:17:46

<<doofs mumble in the chops and stuffs his cap down her gob>>

I'd say both, actually.


Xiaoxiong Fri 10-Jun-11 15:19:40

Dlamis that's exactly what it is. I read a really interesting book analysing the Mafia in the US. It said that the two biggest factors in undermining the power of the Mafia were (1) the state lottery and (2) credit cards. This is because the largest generators of cash for the Mafia were running the numbers and loansharking. When credit cards were introduced, poor people turned to them instead of to the local loanshark.

My grandmother taught at a Catholic school in Queens, NY in the early 50s. She says it was completely normal that when poor people needed money for a funeral, a wedding, an engagement ring or to pay the rent they would all go to this one Mafia guy who would "do for you", give you a short term loan and then come calling for the repayments plus interest. She actually was nostalgic for this set-up and said it was better than the banks, because everyone knew the guy, he knew you and your situation, he wouldn't lend you more than you could pay back plus the interest and the kids all went to Catholic school together. She also said the Mafia families were the best because they were so nice and well behaved in class and one dad built the school a baseball pitch hmm

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