Money Lenders
Written by Amelia Watts   
Monday, 22 October 2007 16:51
Money Lenders have been operating since the Middle Ages, so it should come as no surprise that there are a growing number who charge extortionate rates of interest and who are targeting the most vulnerable of society. These are nothing more than legal Loan Sharks and a few have even been floated on the stock market!

Yes, they will have a Consumer Credit Agreement Licence and must be a registered company, their websites clearly state the APR so why do people still use them?

A quick Google search pulled up interest rates in excess of 578%! No, we haven’t left out a decimal point, that really is five hundred and seventy eight percent. Surely no one would pay that? Sadly people do, as these companies aggressively target people in receipt of benefits or who are on low income, people who are struggling to make ends meet. Once they have them hooked the rest becomes irrelevant.

Here are a few examples of the actual quoted costs
£200.00 with 6 monthly payments of £46.67 pm = £280.02 total repaid which is a whopping 233.4%
£150.00 with 6 monthly payments of £36.25 pm = £217.50 total repaid which has an APR of 280.4%.

Another service readily available is cheque cashing or pay day loans these are on offer with rates of *APR 1284%. How they work is simple; you write 5 cheques for £100.00 and they will pay £425.00 in to your bank account the next day. The cheques will be cashed on your payday next five pay days.

Roll over the payment option
£100.00 £20.00
£200.00 £40.00
£300.00 £60.00
£400.00 £80.00
APR 1284%

Based on Cheques Held For 31 Days
example:

  • Send in 5 cheque's each of £100.
  • Receive £425 paid directly into account day 1
All Cheques cashed on your next payday as follows:
  • Month 1: 1st Cheque Cashed £400 Rolled-Over
  • Month 2: 2nd Cheque Cashed £300 Rolled-Over
  • Month 3: 3rd Cheque Cashed £200 Rolled-Over
  • Month 4: 4th Cheque Cashed £100 Rolled-Over
  • Month 5: 5th Cheque Cashed, Loan Closed.
Also available are Log Book loans where you can secure funds on your car (as long as there is no existing credit on the car) with rates of 366% APR!

*Note Annual Percentage Rates (abbreviated to APR) are worked out as a % of £1000.00 over one year as the loan is being repaid through out its term the APR will be higher.

  • £1000 at 20% paid off in full at the end of the year = £1200.00
  • £1000.00 paid back at £100.00 per month equates to approx 40% although £1200.00 is repaid
Last Updated on Monday, 22 October 2007 16:57
 
Reclaim Bank Charges (While on Benefit)
Written by Amelia Watts   
Sunday, 12 August 2007 07:18
As most people will now be aware, in July 2007 the Office of Fair Trading agreed with seven major high street banks to a test case to determine the legality of bank charges. This effectively has put all claims on hold until the case is decided. However, there is an Act of Parliament which over-rides this if you are in receipt of any of the following benefits.

  • Income Support
  • Tax Credits
  • Child Benefit
  • Job seekers allowance
  • Incapacity benefit
  • Disability living allowance
  • Attendance Allowance
  • CSA payments
  • Other DWP payments.

These benefits are granted to stop hardship and are designed to meet basic day to day needs, and are protected under the Social Security Administration Act 1992 sub section 187. This stipulates that the bank can not apply any charges to money received as benefit, and any such charges are unlawful and therefore disallowed.

If you live north of the border you also have the weight of a successful test case won against a bank (Woods v Royal Bank of Scotland).

So if you have been charged by your bank now is the time to fight back!

The banks will have to action your claim as it is by order of a higher authority, namely an Act of Parliament and not by the Statute of Limitations Act which is being cited in the current bank charges debate and test case. You will need to prove that the funds received in to your account are benefit payments, but your bank statement will be proof enough as the payments will be listed as such. Use the online letter generator below or download (Letter for Scotland or Letter for Rest of UK) in RTF format to start your claim. Good Luck!


Last Updated on Saturday, 08 September 2007 23:04
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Finding Finance
Written by Amelia Watts   
Thursday, 09 August 2007 20:20

Where can you find affordable finance when you have a poor credit history?

There are many options open to you but it is important that you think carefully about taking on any form of credit if you have just come out of an IVA or Bankruptcy. On the high street you will find a mix of retailers willing to give anyone credit but (and yes there is a big but here) at what price? It’s not uncommon for such retailers to advertise rates of 29.9%, however in reality this is a lot higher than it sounds - you could end up paying 3 times the value of the goods so that £300 washing machine has just cost you £900!

It all sounds bleak but do not despair as there are other options that you may not even know exist. Firstly why do you need credit? Think of every reason and weigh up the pros and cons. Do not get credit just because it’s available!

So now after much deliberation AND you are sure that credit is the way to go here are the some options available.

  • Try your bank. Yes, it may seem obvious but many people assume their credit rating is so poor they do not try their bank. Be prepared to be turned down but you do not know until you ask! Your bank knows you and your history with them, such as your salary is paid in to their account. If you are offered a loan check the rate as it may not be the best option for you.
  • Credit Unions (CU). Most towns have one which you can become a member of to access low cost loans after a 13 week qualifying period. Some may even be able to help without the 13 week rule at a higher rate of interest (normally in the region of 25%) but they would be willing to convert any future lending at a later date to the credit union rate of approx 13%.
  • Community Development Finance Institutions (CDFI). You can find out if you have a CDFI local to you by looking at the CDFA website. CDFI offer varying products including Personal loans, Business loans, some offer Home improvement loans and a few do savings plans. Not all do personal loans but they do genuinely help people who other wise would use a Doorstep Lender. Rates will vary dependant on the amount you borrow.
Last Updated on Tuesday, 11 September 2007 06:36
 
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