Remember these - scouse loan defaulters
Discussion
Gets my goat. They didn't have to sign up for the loan (home improvements, after all) and happily agreed to the (somewhat extortionate) terms.
Indeed, had they made their repayments on time, it would have "only" cost them £20k.
Mental illness aside, I don't see what right they have to tkae out a loan, agree terms, refuse to pay it back and then moan about it being "unfair".
Indeed, had they made their repayments on time, it would have "only" cost them £20k.
Mental illness aside, I don't see what right they have to tkae out a loan, agree terms, refuse to pay it back and then moan about it being "unfair".
volvos70t5 said:
The issue is what is a reasonable APR to charge?
Can anyone justify an interest greater than, say, Bank of England Base Rate + 5 points, under any circumstances?
absolutely right they can!
if you're going to lend money to people who have not paid it back in the past through laziness/misplaced morals/genuine hardship thrust upon them/whatever then you adjust the rate accordingly.
in 1989 the BofEBR was in the region of 10-12% IIRC and mortgage rates were 13-14%...so it follows that in those (before deregulation) days that personal loans would've been perhaps 22-25% on the high street and so a personal loan offered on adverse credit or sub prime terms is not really far off the mark at 34.9%. even today if you have bad credit and blemish your credit record by failing to repay what you ought to you may well be offered a personal loan at 34.9% or above!
the issue here is that the applicants failed to keep up the repayments and so the model that applies the late payments kept on applying them until it was a simply huge sum while the applicants kept ignoring it as though it would go away
I suspect that an awful lot of PHers have not and will not be in a position to ever be offered a sub prime loan, it may well surprise you if you do a little googling and get hold of some rates that apply to applicants with a non settled CCJ or perhaps a few defaults
anonymous said:
[redacted]
Clearly worse to extend credit to them. If they are such a poor credit, they should be doing something to shore up their financial position, not borrowing more and incurring even greater cost. It is highly unlikely to be in their interest to borrow further, even if it is something they want to do.
The whole thrust of financial services regulation in the UK is that the service provider has an over-arching duty of care to protect the general public from their grotesque stupidity. The provider is held accountable for only providing suitable services to the client. Given the holes people dig for themselves, I can see no alternative.
The average punter who is refused credit by the high street and is considering turning to one of these loan sharking opertions is (a) likely to be financially incompetent (why else would they be refused a conventional loan)? (b) likely to be under a lot of short-term pressure and panicing (other debtors breathing down their neck, pressure from the family). These people need protecting from themselves. The parasites who feed off them deserve a great kick in the plums.
ATG said:
anonymous said:[redacted]
Clearly worse to extend credit to them.
If they are such a poor credit, they should be doing something to shore up their financial position, not borrowing more and incurring even greater cost. It is highly unlikely to be in their interest to borrow further, even if it is something they want to do.
not necessarily. they may be in hock to loan sharks at an APR of 900%. no that's not a typo. I have personally seen loan agreements (legal and from recognised credit dealers) with APR's in excess of 1100%
so sometimes it is a good idea.
and in any case, I thought we were all a bunch of free marketeers here on PH, if someone is given the appropriate information and no one else will lend to them yet they really need funds for double glazing or a new car then why should credit facilities not be available to them?
>> Edited by minimax on Wednesday 27th July 14:40
minimax said:
The issue is what is a reasonable APR to charge?
Can anyone justify an interest greater than, say, Bank of England Base Rate + 5 points, under any circumstances?
absolutely right they can!
if you're going to lend money to people who have not paid it back in the past through laziness/misplaced morals/genuine hardship thrust upon them/whatever then you adjust the rate accordingly.
in 1989 the BofEBR was in the region of 10-12% IIRC and mortgage rates were 13-14%...so it follows that in those (before deregulation) days that personal loans would've been perhaps 22-25% on the high street and so a personal loan offered on adverse credit or sub prime terms is not really far off the mark at 34.9%. even today if you have bad credit and blemish your credit record by failing to repay what you ought to you may well be offered a personal loan at 34.9% or above!
the issue here is that the applicants failed to keep up the repayments and so the model that applies the late payments kept on applying them until it was a simply huge sum while the applicants kept ignoring it as though it would go away
I suspect that an awful lot of PHers have not and will not be in a position to ever be offered a sub prime loan, it may well surprise you if you do a little googling and get hold of some rates that apply to applicants with a non settled CCJ or perhaps a few defaults
The issue here appears to be twofold, and the blame lies with both parties
1. The documentation was inaccurate at time of signing - irrespective of the amounts, interest rate involved - if the documentation is incorrect or incomplete at point of signing the finance company does not have a leg to stand on.
2. The interest rate and default penalty was extortionate but not illegal. The lender probably was economical with the truth when selling the loan and the customers probably didn't think to ask the relevant questions - we are always told never to sign anything without reading / understanding it. The CAB will always help if people are unsure.
Under the CCA a lender has a responsibility to ensure its customers know the rate and penalties that apply, I would not be surprised if the company concerned isn't under investigation or shortly has its CCA licence revoked.
I try not to make judgements or generalisations about people. I imagine there will be some people out there who are up to their neck in debt and simply want to find a way through it.
A good friend of mine had a good income for about 15 years and then a quiet period of a couple. He got into a hell of a mess but managed to juggle everything OK. He managed to use low % balance transfers to slowly reduce the debt. The sums he managed to save per month by just careful managment were quite considerable - circa £300 per month.
He is now sorted but I do remember he went through a very painful time.
It could happen to any one of us, if we suddenly find ourselves without a job.
Food for thought.
A good friend of mine had a good income for about 15 years and then a quiet period of a couple. He got into a hell of a mess but managed to juggle everything OK. He managed to use low % balance transfers to slowly reduce the debt. The sums he managed to save per month by just careful managment were quite considerable - circa £300 per month.
He is now sorted but I do remember he went through a very painful time.
It could happen to any one of us, if we suddenly find ourselves without a job.
Food for thought.
Volvo, granted, anyone of use could go teats up tomorrow with the wrong wind but it’s the same for everyone. Your friend got into trouble but used their brain and dug themselves out, and I’ll bet they're better protected than they were last time now.
The problem I have with people like those in this situation is that they borrow the money for stupid reasons, for things that they want but don’t need. Then they stop making the payments and cry later. Why did the debt get so high? Well that’s mainly because they stopped paying the monthly payments. What did they expect to happen? The loan co. go, oh that’s alright, we know you haven’t paid us a bean for 3 months but don’t you worry about that, we’ll freeze the loan till you want to start paying us back again?
>> Edited by Rude-boy on Wednesday 27th July 15:23
The problem I have with people like those in this situation is that they borrow the money for stupid reasons, for things that they want but don’t need. Then they stop making the payments and cry later. Why did the debt get so high? Well that’s mainly because they stopped paying the monthly payments. What did they expect to happen? The loan co. go, oh that’s alright, we know you haven’t paid us a bean for 3 months but don’t you worry about that, we’ll freeze the loan till you want to start paying us back again?
>> Edited by Rude-boy on Wednesday 27th July 15:23
volvos70t5 said:
A good friend of mine had a good income for about 15 years and then a quiet period of a couple. He got into a hell of a mess
[...]
It could happen to any one of us, if we suddenly find ourselves without a job.
Indeed. Your spending habits tend to take a while to adjust when your income is suddenly reduced, especially if you view it as "merely a blip" (say, if you are self-employed) and use cards to cover the shortfall for a while.
Before you scoff, it is incredibly easy to do.
>> Edited by JonRB on Wednesday 27th July 15:21
In general:
(1) If you are in hock to an illegal money lender, then the right course of action is to go to the police.
(2) If your financial position is so weak that an extorionately expensive loan like this seems like a good idea, then personal bankruptcy is a better solution.
Taking out extortionate loans is only a way of temporarily delaying the inevitable crisis, and the longer it is put off the bigger the problem will have become. It is much better to bite the bullet early.
In this specific case there was an element of bad luck insofar as the structure of the loan locked in what was initally an extremely expensive interest rate and, because the loan ran for longer than expected into a period of low rates and inflation, that rate became extortionate. The lender may not have been to blame for failing to see tha rates would fall very quickly; they can't be expected to see into the future. But when the terms of the loan clearly became entirely unreasonable, they appear to have done little to put the situation right.
Taking out a home improvement loan should not expose you to substantial financial risk.
(1) If you are in hock to an illegal money lender, then the right course of action is to go to the police.
(2) If your financial position is so weak that an extorionately expensive loan like this seems like a good idea, then personal bankruptcy is a better solution.
Taking out extortionate loans is only a way of temporarily delaying the inevitable crisis, and the longer it is put off the bigger the problem will have become. It is much better to bite the bullet early.
In this specific case there was an element of bad luck insofar as the structure of the loan locked in what was initally an extremely expensive interest rate and, because the loan ran for longer than expected into a period of low rates and inflation, that rate became extortionate. The lender may not have been to blame for failing to see tha rates would fall very quickly; they can't be expected to see into the future. But when the terms of the loan clearly became entirely unreasonable, they appear to have done little to put the situation right.
Taking out a home improvement loan should not expose you to substantial financial risk.
Stopping the likes of Ocean Finance from advertising in prime pikey-time TV and making them be a little more clear on the actual cost of their finance would be a good start...
There are a lot of desperate people out there, and the ads make it seem so simple - "they consolidated our debts and now we're only paying £250 a month"
Yes indeed, £250 a month for the rest of your life
There are a lot of desperate people out there, and the ads make it seem so simple - "they consolidated our debts and now we're only paying £250 a month"
Yes indeed, £250 a month for the rest of your life
anonymous said:
[redacted]
So that we end up paying for the buggers for the rest of their lives? Not unless we can flog all their redundant internal organs....
I say tough shite to the finance company. The main reason being is that this should have been brought to a head long before the amount owed reached this magnitude. But the lender wouldn't foreclose after 1 year of missed repayments... no.. better to sit on it and take no action until the amount has grown so much we can take their house, while we're refinancing their loan at a mere 5% the whole time.
Bollocks to them.
miniman said:Couldn't agree more. When I first saw these adverts I was genuinely stunned. If my old firm of fund managers started running adverts like that to the general public, the regulator would have closed us down and banned those responsible from working in finace again. Failure to comply with our regulatory environment could even see people going to prison (civil law that carries criminal tarrifs ... nice ... wot, no human rights?).
Stopping the likes of Ocean Finance from advertising in prime pikey-time TV and making them be a little more clear on the actual cost of their finance would be a good start...
There are a lot of desperate people out there, and the ads make it seem so simple - "they consolidated our debts and now we're only paying £250 a month"
Yes indeed, £250 a month for the rest of your life
minimax said:
if you're going to lend money to people who have not paid it back in the past through laziness/misplaced morals/genuine hardship thrust upon them/whatever then you adjust the rate...
...in such a way as to make it even harder for them to pay it back this time.
I am so, so glad I don't work in finance.
Pigeon said:
if you're going to lend money to people who have not paid it back in the past through laziness/misplaced morals/genuine hardship thrust upon them/whatever then you adjust the rate...
...in such a way as to make it even harder for them to pay it back this time.
I am so, so glad I don't work in finance.
you obviously don't see the benefits to it then chap
however I think you may have the wrong end of the stick over this
the point is fairly clear IMHO - if you make yourself a higher risk by not keeping to previous agreements ie your track record is bad then you must be prepared to accept less favourable terms until such time as you can show 'evidence' that you will pay things back when they are due that's the key.
IIRC the couple in question had already paid over £40k on this loan.
The trouble started when they defaulted and started getting letters to the tune of £25 each. The statements every three months or something like that cost £35, and each time a payment bounced, the bank charged them £25 and the lender added another £25 on top of the missed payment letter.
The £384,000 was "owing" because of these extra charges, not because they were unable to pay the interest on the loan.
Again, IIRC the judge ruled that the company could not add interest to the value of the letters and admin charges. They could only add interest to the actual sum that was borrowed.
The trouble started when they defaulted and started getting letters to the tune of £25 each. The statements every three months or something like that cost £35, and each time a payment bounced, the bank charged them £25 and the lender added another £25 on top of the missed payment letter.
The £384,000 was "owing" because of these extra charges, not because they were unable to pay the interest on the loan.
Again, IIRC the judge ruled that the company could not add interest to the value of the letters and admin charges. They could only add interest to the actual sum that was borrowed.
minimax said:
if you're going to lend money to people who have not paid it back in the past through laziness/misplaced morals/genuine hardship thrust upon them/whatever then you adjust the rate...
...in such a way as to make it even harder for them to pay it back this time.
I am so, so glad I don't work in finance.
you obviously don't see the benefits to it then chap
I can understand them
it's just that I'd rather be doing stuff I enjoy and not having much money, than doing stuff I don't enjoy and having lots... Computers, electronics, cars, odd plumbing jobs and stuff - great. Finance - wibble minimax said:
however I think you may have the wrong end of the stick over this
the point is fairly clear IMHO - if you make yourself a higher risk by not keeping to previous agreements ie your track record is bad then you must be prepared to accept less favourable terms until such time as you can show 'evidence' that you will pay things back when they are due that's the key.
Oh, I see the point, I was just pointing out another aspect of it. I agree you could hardly offer them more favourable terms
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