Payday loans tax

[rarerabitt]

Just seen on tv labour is saying if there in power they are going to tax pay day loan company's to make it difficult to trade in my opinion this isn't going to stop demand for them

Aibu to think they'd be better

A addressing why so many people use these company's

B providing a safer cheaper way to provide these short term loans to the most vulnerable who need money urgently but can't get proper credit

I reckon they should cap the interest repayments, I mean some of these companies charge 2000% interest, wrong wrong wrong. If they capped it at a less rob you blind rate, I think it would help more.

The companies will just put up their interest rates to cover the charges to themselves and it'll be Joe Bloggs on the street who ends up paying it.

clever hits it on the head - the costs will get passed on. Loopy - I am afraid you are just that. Should we tell lenders the maximum they should lend? lending is a risk based decision making process. in order for the firm to stay solvent, they need to judge the risk of the bad debt. If a person is at risk of bad debt, then they pay a higher rate of interest. capping the rate will introduce "admin fees" "application fees" etc.

As for 2000% you are i assume working on APR. A payday loan is designed to be paid back within 3-4 weeks after that there are swingeing charges to encourage people to pay them back very quickly. Most users of payday loans never pay anything like that amount of interest.

Anyway - whilst we may not agree with them - are you suggesting controlling the lending decisions of all lenders? This is what leads to banking crises.

Dont get me started on the Tobin tax either - though i suspect all people see there is ££billions of free money for the government to spend on civil servants instead of every single pension and insurance policy suddenly getting significantly more expensive.

A transaction tax always gets passed to the end customer and is then costs jobs and puts firms out of business.

You obviously know more about finances than me. My only question on a more moralistic rather than financially astute reasoning is - if you can justify 2000% interest on a short term loan, or as I have learnt from the news today 4000%, surely the lenders ought to have a moral obligation to refer such people in dire financial situations to debt charities rather than take advantage of misfortune of such borrowers. I admit I know diddly squat about such regulations, I just think its irresponsible to allow someone to get into an even worse financial mess, that's all.

Make it illegal to charge extortionate rates if tax would be more useful

'are you suggesting controlling the lending decisions of all lenders? This is what leads to banking crises.'

the exact opposite.is precisely lack of supervision of lenders that led to the mess we are in now.

b. hence miliband at a credit union recently.

“We would cap the cost of credit, halt the spread of payday lenders on our high streets and force them to fund the credit unions that can offer a real alternative for people in desperate need,”

source

Yeah, "he would". If he had a snowballs chance in hell of ever becoming PM . Which he doesn't.

Anyway - whilst we may not agree with them - are you suggesting controlling the lending decisions of all lenders? This is what leads to banking crises

My arse. If there had been more government intervention in the UK and the US over sub-prime loans then the banking crisis would not have kicked off as it did in 2008 with the collapse of Fannie Mae and Freddy Mac et al. You seem to have a short memory.