Potential Loan Service

[Bobbins37]

Mods: This is not a promotional post. I am just looking for opinions.

 

I currently work in the finance industry and have noticed the explosion in payday loan industry in the past couple of years. As companies have chased business they have made it pretty easy to obtain cash. Obviously this has led to a lot of people getting in over their heads quickly, especially with the "roll overs".

 

Reading the threads here the major frustration when dealing with these companies seems to be when trying to offer a settlement or payment plan. The companies treat everybody as if they are "wont pays" rather than "cant pay right now". Either you cant contact the right people, documents get lost or they are unreasonable about the structure of payments.

 

My question is: Do you think there would be room for a service where a company dealt with the payday loan company on behalf of the individual?

 

It strikes me a number of people are only in debt due to short term commitments like payday loans. Debt Management plans or IVA's are too extreme for people in these situations as these issues could be solved relatively quickly.

 

The company would bear the cost obviously and part of the agreement would be that interest, fees etc would be frozen.

 

Thoughts? (abuse, outrage ;-) )

[sillygirl1]

The only way to stop these payday loan companies is to make them do the repayments over 3 months instead of one, and stop them using APR as a guideline.

 

What you are trying to offer would not work, been reading the Evening Standard by any chance and fallen for their £1800 up front fees for setting up your own DCA?

 

I've reported that company to the MOJ who would have to issue you with a licence in the first place.

[Lefty]

If you don't do it, someone else will...

While you're looking at pay-day loans, why not take a look at door-step loans (Provident etc), hire purchase stores (BrightHouse, Buy as You View, Perfect Home etc) and buy-back stores (Cash Converters, Cash Generators)... They all have the same remit... Milk the poor and vulnerable.

Personally, I just think a major re-vamp of the Government's Social Fund would nail most of these exploitative companies.

All the best!

Cheers

Lefty

[Bobbins37]

The only way to stop these payday loan companies is to make them do the repayments over 3 months instead of one, and stop them using APR as a guideline.

 

What you are trying to offer would not work, been reading the Evening Standard by any chance and fallen for their £1800 up front fees for setting up your own DCA?

 

I've reported that company to the MOJ who would have to issue you with a licence in the first place.

 

European Credit Directive will have a calculation that theoretically replaces APR but it sounds even more complicated!

 

Im not sure what youre saying about the MOJ. They regulate claims etc that have legal requirements (potentially). No I havent been lured in by a debt management franchise I have a consumer credit license.

[Bobbins37]

If you don't do it, someone else will...

 

While you're looking at pay-day loans, why not take a look at door-step loans (Provident etc), hire purchase stores (BrightHouse, Buy as You View, Perfect Home etc) and buy-back stores (Cash Converters, Cash Generators)... They all have the same remit... Milk the poor and vulnerable.

 

Personally, I just think a major re-vamp of the Government's Social Fund would nail most of these exploitative companies.

 

All the best!

 

Cheers

Lefty

 

 

I didnt want to get too far into the moral or political side of this industry here. My personal opinion of those companies you mention is different to payday loans as the loan terms are fixed and they rarely charge big penalty fees (Provident anyway, I have no experience of Brighthouse). I am not convinced that more regulation is the way forward either.

 

We live in a time where it is getting easier for people to get in debt but it is also easier to walk away from them as well. Debt management, IVA's, mini-IVA's havent been around for all that long. I think more people are understanding that keeping a relatively clean credit file is important these days as so many things depend on it.

 

Obviously this would be a business so I would want to make money but I look for a win-win situation in anything I do and on the surface this looks like it could be that scenario.

[vicky180]

I think that this could be a great idea, people dont want to deal with these companies themselves so why not pay somebody else a small fee to do it for you, although I am aware that you are in it to make a profit you will have to remember that alot of people who take out these loans wont be able to afford ridiculous fees etc The other thing I will say is that it could stop people from taking these debts seriously I think that you would have to make people aware from day one that you cannot guarantee repayment plans etc, Also I suppose there is the fact that many people have already tried to be reasonable with these companies and failed so why would you be different to anybody else?

[Bobbins37]

I think that this could be a great idea, people dont want to deal with these companies themselves so why not pay somebody else a small fee to do it for you, although I am aware that you are in it to make a profit you will have to remember that alot of people who take out these loans wont be able to afford ridiculous fees etc The other thing I will say is that it could stop people from taking these debts seriously I think that you would have to make people aware from day one that you cannot guarantee repayment plans etc, Also I suppose there is the fact that many people have already tried to be reasonable with these companies and failed so why would you be different to anybody else?

 

Thanks for the feedback.

 

I dont plan on charging a fee to the consumer and if I did it would have to be kept small (

 

I agree on the perception of the service by both parties would have to be managed. As I said this is more aimed at the "cant pays" rather than "wont pays". People who have not had meaningful contact with the company or are being chased by a DCA.

 

Im sure there will a number of payday companies that would just refuse to enter a dialogue with a company like this. As some companies do with debt management firms.

 

It appears to be mainly penalty fees is what pushes the costs beyond what people can reasonably afford. If these are frozen or negotiated then the whole debt can be settled in a relatively short space of time.

[robjam1969]

I suspect a lot of these companies won't play ball with you. They rely on the fear factor and you will ptentially negate this. One company capital finance one are already offering the service you suggest.

 

However if you get agreement from all the companies you will give those who don't want to fight them another alternative.

 

The important thing for folk to remember is that they can do all this work themselves. Your proposed charge would seem reasonable- hard to see where you would make your profits or cover your costs.

[Bobbins37]

I suspect a lot of these companies won't play ball with you. They rely on the fear factor and you will ptentially negate this. One company capital finance one are already offering the service you suggest.

 

However if you get agreement from all the companies you will give those who don't want to fight them another alternative.

 

The important thing for folk to remember is that they can do all this work themselves. Your proposed charge would seem reasonable- hard to see where you would make your profits or cover your costs.

 

Hi robjam. I suspect, in a number of cases, youre right. Some will play ball some will refuse. If I approach it from the commercial aspect then I think I will have more success. I know for a fact that the performance of the debt collection companies for payday loan firms is very, very poor. If they can recover money with broadly the same costs but with a much higher success rate then they would be foolish to reject it.

 

Ive probably said enough here as Im sure these very same companies read this! If I do trial this service I will let you know.

 

Many thanks

[jinjhaninjha]

I agree with the 3 months repayment plan, would get them their money back, would help the client to repay, and would probably improve relations.