Loan sharks?

[redken1]

Perhaps someone on WB who is employed in finance can enlighten me.

I received a letter from Vanquis bank yesterday informing me that I had been pre-selected to apply for a visa credit card with an initial credit limit of £1000.

Although I have no intention of accepting their offer, I was gob-smacked at the interest rate applied to the card – 39.9% APR variable. In light of the recent ‘credit crunch’ and the fact that interest rates are currently at a historical low, I find this figure unbelievable.

Is there a ceiling on interest rates or can these apparent loan sharks fix whatever rates they like?

[njl]

I'm no expert but given what some of these 'payday'lenders charge for short term loans is scary.

[Dabz]

Most I've seen is 2149% apr

You can charge what you want if people will say yes

[dell_boy]

vanquis cards as far as i know are used by people who have been made bankrupt,..or financial problems. yes high percentage rates,..but they get offered to anyone (thus the high %)

they are a tool for rebuilding credit ratings,..people get advised to use them,..but payback allmost immeadiately

[Toph]

How is it legal to charge 2000 % apr on a loan when the interest rate on savings is 0.5% ??

[Squashed_Fly]

How is it legal to charge 2000 % apr on a loan when the interest rate on savings is 0.5% ??

You have to look at it in context. the figure is an APR figure (annual percentage rate). Payday loans are for a few days/weeks, so they have to show an APR by law, but it's useless to use it as a comparison tool.

They can be useful, especially considering your banks are the real rip off merchants. Example?

Jon smith has 3 direct debits due to go out of his bank, but it's 4 days before payday and he doesn't have enough left to cover them. If he leaves it, his bank charges £25 per unpaid DD, leaving a £75 charge, and he would still have to pay back the DD after being paid meaning £155 payable and a black mark on his credit history.

Or, he goes to a paydan loan provider, who charges him £30 to borrow £100, meaning hs total repayment is £130, leaving his DDs paid, an extra £20 to tide him over or to be put back towards the repayment (meaning he only pays back £110), and he gets a bonus point on his credit file for paying his DDs on time, and an extra bonus point for having a loan that is paid bak on time.

Now tell me it's the PDL companies that are the criminals, and not your banks......


One other set of examples to highlight the uselessness of using the APR of 2000% as a comparison:

[Swanny]

Credit companies are not there to help you, only to help themselves.


The words Robbing B$%*£"&ds spring to mind

[Squashed_Fly]

Credit companies are not there to help you, only to help themselves.

With respect, that's kind of a ridiculous comment.

The same is true for any business - they are all there to make money, not just credit companies. However, they are still a better option than racking up bank charges etc which are so ridiculous.

As far as I'm aware, there are no profit making companies that supply services/products, that do so purely to help people, and with no moneymaking objectives in mind. If you need their services, then they are helpful. If you don't, then of course they're of no importance to you

[Scotty]

[quote author=Swanny link=1329681054/6#6 date=1329730564]Credit companies are not there to help you, only to help themselves.

With respect, that's kind of a ridiculous comment.
[/quote]
Oh, the irony...... ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D

[wiltshire builders]

[quote author=Squashed_Fly link=1329681054/7#7 date=1329731491][quote author=Swanny link=1329681054/6#6 date=1329730564]Credit companies are not there to help you, only to help themselves.

With respect, that's kind of a ridiculous comment.
[/quote]
Oh, the irony...... ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D[/quote]
Steady. The season hasn't started yet. ;D

Very good point though, if used senisibly, pay day loan companies can be useful.
Banks are *@%!$! If i so much as breath near my business account I get charged.
When I was a teen and still living at home I was regularly sent letters about pre-approved loans of £10000. I earned £150 per week.