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Typical 2356% APR - heck!


michael

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Just watching a bit of daytime TV and an advert for short-term "payday loans" came on:

 

http://www.quickquid.co.uk/tv

 

2356% APR - how can that be allowed? Who goes for this kind of thing? If you need money that badly what the hell are you doing with a TV? Why are you at home?

 

The website actually states 2222.46% so they are being a bit nicer today.

 

*buys new car via quickquid*

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If you borrow, say £500, then pay back, say £600/£550 2 to 3 weeks later, that would then equate to the outlandish quoted APR.

An APR calculation is made by a highly mathematical equation, its not easy to do, or indeed comprehend.

If you borrow £1000 off Barclays over a year and pay £1100 back, thats 10% to you and I, but the APR would actoally be about 25%...

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Isn't that a mis-print or something because surely that would mean if you borrowed £400 you would end up paying back thousands or is that actually the so called "deal" you are getting??!!

 

I didn't spend too much time looking but one example they quote on their site is that if you borrow £50 and pay it back next month you have to give them about £80. If you decide you can't afford it that month and spread the payment to the next one it goes up even more.

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I do feel sorry for those who try to live frugally but still need short-term loans to tide themselves over, but as bradleyh said there are those for whom keeping the the massive widescreen flat panel TV and the XBox and the PS3 and God knows what other consumer electronics they have lying around, is a priority above all others. If keeping them doesn't leave them with enough money to buy nappies for their quantititious offspring or multi-packs of strong supermarket lager, then a short-term loan it is. :(

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I didn't spend too much time looking but one example they quote on their site is that if you borrow £50 and pay it back next month you have to give them about £80. If you decide you can't afford it that month and spread the payment to the next one it goes up even more.

 

That sounds entirely plausible, and those figures I imagine are not abnormal. That's how the short-term loans companies operate.

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