183.2% APR..is that legal?

[Angilion]

I noticed this as a banner ad when looking at some lolcats. I thought it might be a mistake, so I checked:

http://www.providentpersonalcredit.com/?disp=1&info=AdSmart&detail=RON_CPC_B_banner_728X90

Are there no limits on interest rates as long as they're stated?

183.2%? That's absurd!

 

[Darkwave]

My mum used to work for them, it's totally legit and people in extreme debt tend to use them. You end up with a loan shark coming round every week or so for their payment, this was my mum's job.

 

[Rotty]

legal ? yes, moral ? not a chance

 

[_PD_]

On a 31 week term, it's 365.1% APR

 

[semi-pro waster]

As said it is entirely legal but rather unethical. Many of these are targetted at people who already have a bad credit history so the rates are higher to factor in that defaults are more likely - it makes for a somewhat vicious circle.

 

[sniffy]

365.1% APR? Jesus Christ

I need to get into lending!

 

[Darkwave]

365.1% APR? Jesus Christ

I need to get into lending!

Keep in mind you'd be lending to people no one else will.

This is the risk the business takes and why they have such a high interest rate.

 

[DarkShadow]

Do people really get that desperate?

 

[Darkwave]

Do people really get that desperate?

Yes. Some people get such a bad credit limit that nobody will lend them money.

These people are the type Provident love to prey on.

 

[sniffy]

Keep in mind you'd be lending to people no one else will.

This is the risk the business takes and why they have such a high interest rate.

Fair point.

They must get a nice return overall though?

 

[Darkwave]

Fair point.

They must get a nice return overall though?

Oh yes, companies like Provident make a huge profit.

 

[DarkShadow]

Yes. Some people get such a bad credit limit that nobody will lend them money.

These people are the type Provident love to prey on.

That said, it says:

apply online for cash loans from £50 to £500

Even if I was completely broke, I wouldn't contemplate that

 

[semi-pro waster]

That said, it says:



Even if I was completely broke, I wouldn't contemplate that

Perhaps not but plenty of people will and remember that these are people who are already in debt for whatever reason so they have fewer options generally and quite possibly aren't particularly prudent with money to begin with.

 

[Kitchster_uk]

Fair point.

They must get a nice return overall though?

Not really. The setup and paperwork costs are fairly high and you're lending small amounts. There will be a high level of default as well, plus a large amount of man-power required to 'make the arrangements work'...

 

[Darkwave]

I just spoke to my mum about this since I read this thread.

She said one thing Provident don't tell people is that if you can't afford to pay back their loan in the agreed time you can pay a "silver coin of the realm" weekly until whatever time it's paid off.

She said though that they do not tell their customers this.

 

[sniffy]

Excuse my ignorance but what is a "silver coin of the realm"?

 

[Darkwave]

Excuse my ignorance but what is a "silver coin of the realm"?

5p, 10p, 20p, 50p pieces.

 

[sniffy]

Oh, not surprised they keep that hush hush

 

[[TR]SweetSpotOz]

/

 

[Sarduk]

legal ? yes, moral ? not a chance

Why? You have to take into account the huge amount of admin (processing the lending, managing the accounts, chasing the accounts) as well as all the defaulters.