Pay Day Loans

Recently heard on U.K. radio much adverse comment on pay day loans, an import from the U.S. It seems the APR can run to over 1000%. while a once off temporary loan might be OK i wonder if the authorities here have issued any warnings regarding what can happen if a person has to rollover such loans.

I can't imainge any court in this courty would enforce a loan with the amount owed trippes every day

http://news.bbc.co.uk/1/hi/business/7526527.stm

Almost 2000% APR according to the good people at the beeb. We are usually a couple of years behind the UK for new financial services (e.g. 0% balance transfers, sub-prime mortgages etc.) so I expect these to turn up here shortly.

Pawnbroking has also risen dramatically. The link to the online article is here http://news.bbc.co.uk/1/hi/business/7371795.stm
Sign of the times!!

In reply to JHegarty I agree a court here would unlikely enforce such a loan but a borrower runs the risk of a court judgment and subsequent damage to his credit rating.

They won't get a judgement if the court refuses to enforce.

jhegarty said:

I can't imainge any court in this courty would enforce a loan with the amount owed trippes every day

Click to expand...

Why not?

If I choose to borrow money at an extortionate rate of interest and it is not illegal (e.g. there is a top limit to the interest rate a moneylender can apply) why on earth would a court not grant judgment if I default?

And if a court grants a judgment, a court will enforce it.

I appreciate that someone who chooses to, or by circumstances is "forced" , to borrow at these rates may not have real alternatives but it is not the case that a Court would not enforce these loans. Not unless they are actually illegal.

mf

Personally, I've never understood "Payday" loans ... isn't that what you have an overdraft for??

Maybe they're aimed at people who would not qualify for an overdraft?