2385% apr ?

[chowder]

On UK TV there is currently an advert for loans against against your next pay check.

The APR is 2385%, you must be fucking shitting me !!

I tell you, anyone who takes these robbing bastards up on that sort of offer must be really desperate

[Lobsang]

Umm... Sure it's not 2 POINT 385%?

[chowder]

Originally Posted by Lobsang

Umm... Sure it's not 2 POINT 385%?

::


Must make appointment at optician or buy bigger TV

[Lsura]

Having worked for a payday loan co, that number didn't look all THAT odd, interestingly enough.

[otternell]

even 2.385 is low for an APR (ANNUAL % rate) I'm betting 23.85%

[Mindfield]

That does sound high, but some of those payday loan places have been known to charge usurious rates. Several of them where I live were recently the subjects of class action lawsuits for charging ridiculous interest rates. They've now changed to a flat rate of $20 per $100 borrowed. That's 20%, but it's 20% for two weeks worth of loan. That's a 500% APR if you re-borrowed $100 every two weeks for a year.

[Lsura]

Originally Posted by otternell

even 2.385 is low for an APR (ANNUAL % rate) I'm betting 23.85%

For a payday loan, I bet it was 238.5% - 23.85 is wicked low for that type of thing (at least in the U.S.).

[Tapioca Dextrin]

Originally Posted by Lsura

Having worked for a payday loan co, that number didn't look all THAT odd, interestingly enough.

It's around 11% a week. Kinda normal

[iamthewalrus(:3=]

Originally Posted by Lsura

For a payday loan, I bet it was 238.5% - 23.85 is wicked low for that type of thing (at least in the U.S.).

I'm quite entertained by the fact that three different people have three different orders of magnitude that they think is a "reasonable" value for this loan rate.

FWIW, I think you're right. Credit cards are 20ish%, payday loans are much worse.

[Lobsang]

Originally Posted by otternell

even 2.385 is low for an APR (ANNUAL % rate) I'm betting 23.85%

Yeah I thought the same within seconds of posting.

[Lobsang]

Originally Posted by iamthewalrus(:3=

I'm quite entertained by the fact that three different people have three different orders of magnitude that they think is a "reasonable" value for this loan rate.

FWIW, I think you're right. Credit cards are 20ish%, payday loans are much worse.

In my defence - I haven't a clue what a payday loan is. I am used to car finance loans (6%) and credit card APRS (low double digit percentages)

[Airman Doors, USAF]

No, he was right the first time. It's almost certainly 2385% APR, although that's actually kind of low for these types of guys:

It is crucial that you repay a payday loan as soon as possible. Many people get into trouble with these types of loans when they are unable to quickly repay the debt. If you can’t repay the loan at the end of the term, you’ll be charged expensive additional fees. It is very costly to be stuck in a payday loan cycle for a long time and can lead to larger financial problems. Payday loans are also much more expensive than other methods of borrowing money. In most cases the annual percentage rate (APR) on a payday loan averages about 400%, but the APR is often as high as 5,000%. A standard credit card has an APR of 12% and a standard loan APR is around 7%. If possible, it is better to use a credit card or tap into your savings in the event of an emergency.

[Nametag]

Payday loans are supposed to be paid back within days. If you only borrow for a weekend, that 2.15% daily interest is a pittance. If you let it compound for a year... well, you're an idiot. Yeah, that's all it takes to get an APR of 2385%.

[chowder]

Originally Posted by Airman Doors, USAF

No, he was right the first time. It's almost certainly 2385% APR, although that's actually kind of low for these types of guys:

Yes I was, consider this>> withdrawn

[EvilTOJ]

Oregon recently passed a law saying payday loans could only have a 36% APR. Previously they were routinely charging 500% APR or more. Now they're all out of business, and I for one don't miss them one whit.

[Gorsnak]

I thought that the nominal APR on payday loans was reasonablish (like, sub-50%) but that they tacked on all kinds of fees that make the effective APR stupid. Do they really publicly acknowledge the "after-fees" APR?

[ColdPhoenix]

The percentages tend to be high even before the additional fees. They are high due to the short-term nature and convenience. You can even get them by text now as this story from last week shows:
http://www.guardian.co.uk/money/2009...ly-convenience

A lot of students in the UK have got into trouble with them. They took out these loans to tide them over until their student loans were paid out in (say) a week or two, happy to pay £20 to borrow £100 for 2 weeks. Unfortunately there were delays in getting student loans out this year, a couple of months in cases. the loans mounted up extremely quickly.

When I saw that on the news they were talking about how these firms were preying on little students. I'm off the opinion that students are supposed to be our brightest and best, any of them who are stupid enough to get involved with these vultures deserve what they get...