Anyone good at working % out on loan

[granadagirl]

So bloody stupid son got himself in debt
To the sum of 4K
He had numerous of those pay day loan things 😡 and just told me
I’ve gone mad with him, but obviously want to help him sort himself out the most fungal way.

He got loan on the 14 August £400, I tol him to ask for settlement figure. He hasn’t made any payments yet
The settlement figure is £487.55 so £87.55 interest
What is this in Apr %

I make it about 1600%

Bloody Nora, he’s not paying that
Bloody knew they were sharks but that’s robbery

Anyone ? To to the figure

The sooner he pays it the better, they are not going to reduce the interest OP. The APR will be on the loan agreement that he signed along with any penalties for early repayment.

Well assuming the settlement figure includes one month of interest, and no other charges (early repayment for example) then over a year that would be over £1000 in interest. So 250% ish. (100% interest means he'd be paying the same as the borrowed amount in interest, so it's about 2.5 times that.)

Is it not about 262% APR?

There's probably a set repayment charge eg £50 plus the interest , unfortunately normal

Is it not about 262% APR?
OP says he borrowed it on 14 August. I calculated '£87.55 in five days' to be equivalent to '£6,391.15 in a year' i.e. 1597%.
It may not be all interest, though. Some of the £87.55 could be fees or charges. It's still a lot of money, whatever you call it.

I didnt even look at the date tbh. Yeah, it depends if there is an early settlement fee and how much of the figure is interest

He’s robbing Peter to pay Paul !!!!

The loans for a month
So he got it on the £400 14 Aug and will pay it back on 14 sept @ £487.55

APRs for short term loans of relatively small amounts of money are misleading because they're not designed to be used in this way.

Obviously the apparent interest rate is going to be disproportionately high, because the loan company has certain costs that need to be covered, but obviously this needs sorting out and your DS needs to learn that payday loans are rarely a sensible solution, particularly when they're not a one off and you get into the position that he seems to have done where he's taken out multiple loans and really racked up the charges and interest.

Luckily you may be able to help him reclaim some of the cost as they're often missold - by definition almost everyone who finds themselves in the position of needing a payday loan should be refused it because it's not affordable, so that might be a route out of a lot of what he owes.

Does he work? Is he just bad/inexperienced with money or is there a problem with his income not covering his essentials, gambling etc?

Assuming he's a young adult, this could be a turning point for him. He could be in the position where he sees this as a wake up call and learns to manage his money and avoids traps like this, or it could be the start of a downward spiral where he struggles for money for decades, partly because he wastes money on interest and doesn't understand the difference between needs and wants and sensible prioritisation.

Anyway, have a look at MSE for help with the loan, and budgeting and money in general.

www.moneysavingexpert.com/reclaim/free-payday-loans-refunds/free-payday-loans-refunds/?utm_expid=.xLovegxtRrG3mZ766tiMqg.1&utm_referrer=https%3A%2F%2Fwww.moneysavingexpert.com%2Fnews%2Ftag%2Fpayday-loans%2Fpage%2F5%2F

Thank you Barbara
He’s contacted the loan company and managed to pay it off without paying the £87 interest so that’s a great start.

He does work, he is inexperienced in sorting money ! We’re going through a plan together so that he can see exactly what he spends and what he has left.