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Pay Day Loan Shark Outfits Hook £1.2 Billion to the Financially Illiterate

ConsumerWatch / Debt & Loans Aug 15, 2010 - 10:26 AM GMT

By: Nadeem_Walayat

ConsumerWatch

Consumer Focus reports that over a million UK borrowers have been forced to take out more than £1.2 billion from Pay Day loan outfits as high street banks refuse to lend, up more than 40% on the preceding year. Pay Day loans typically charge customers APR's of over 2,000% and are targeting those desperate for short-term credit which usually means the financially illiterate.


The Inflation Mega-Trend Ebook (FREE DOWNLOAD), warned of the dangers of Pay Day loans which amount to a failure of the previous Labour government and FSA to properly regulate and cap interest rates charged by what amount to legalised loan sharks.

The Inflation Mega-Trend Ebook - Page 50

Pay Day Loans - During the great recession many pay day loan outfits have sprung up that offer to fill the gap between each pay cheque with near instant small loans of upto £1000 that borrowers are further enticed to roll over into the next pay day. To be blunt, if you are considering these types of loans then you might as well put a gun to your head for all of the distress they will eventually cause you. Whilst the base rate is at 0.5%, pay day loan outfits are charging over 2,000% APR. These types of loans should be illegal in Britain but they are not, which just illustrates how inept the financial regulator is in allowing ordinary citizens to fall victim to 'legal' loan sharks. If the FSA had the best interests of the general public at heart then it would lobby the government to introduce legislation to CAP ALL interest rates at base rate plus 10%. Yes it would mean that the financially illiterate presently taking on extremely high risk loans would usually be denied loans due to the risk / reward factor, but that is how it should be.

The Pay Day loans are further evidence of Britains Bankster run financial system supported by regulators that look the other way so as their colleagues in the financial sector fleece the most vulnerable in society of their earnings. The financial entities that deliver Pay Day Loan services charging as much as over 2,000% APR are typically subsidiaries of tax payer bailed out banks that refuse to lend at lower rates thus forcing vulnerable customers into the arms of their Pay Day subsidiaries and which in return pay interest to savers at typically less than 2%.

There is no one on the side of the ordinary people, not the government, not the regulator and definitely not the central bank. Britain requires a banking revolution where all of the retail banks MUST be nationalised including the former building societies being re-mutualised.

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-10 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on UK inflation, economy, interest rates and the housing market and he is the author of the NEW Inflation Mega-Trend ebook that can be downloaded for Free. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 500 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Rick
15 Aug 10, 15:45
Loan Sharking

We unfortunately have the same pay day loan shark outfits in the United States as well. These type of shops should be either regulated or closed down.


Mukhtar Jivanjee
16 Aug 10, 17:19
Deflation fears

Mr Walayat

You view the current action by governments as inflationary. However after watching the following on BNN, what in your opinion are the major factors that USA UK etc. avoid Japanese style deflation.

http://watch.bnn.ca/bermans-call/august-2010/bermans-call-august-16-2010/#clip336803


Nadeem_Walayat
16 Aug 10, 19:15
deflation

There is no deflation in the UK, CPI is +3.2% not -3.2%


teal
19 Aug 10, 02:19
Loans

I think that there is no deflation in UK now.


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