Payday Loans, for those not in the know are loans which are intended to be incredibly short term. As their name suggests, you take a loan out then pay it back next time you get paid. In theory. The problem with this is that they have huge interest rates. As it’s only a month, you’ll not normally notice it, but if you happen to not be able to pay for whatever reason then it can quickly get out of control.
Now, when I say huge interest rates, I mean that having an interest rate over 1000% is not unusual. In fact, in some cases the interest rate can reach as much as 2,500%! Lots of people do these for a quick injection of cash, but a lot can happen in a month. Say you get laid off, and you can’t afford to pay it back and pay your rent… after just three months, your loan would have more than doubled in size and there’s not really much you can do to stop it without getting professional help.
Which is why recent news that payday loans have stopped increasing in volume is good, and shows that our finances as a country are improving. Hopefully they will start to decrease, especially as banks are increasing their interest rates on personal loans (ignoring the decreasing base rate) to truly show that they don’t really know what’s going on.
Nathan Current Affairs, Loan Advice apr, credit, loan, payday loans, personal loan
A few months ago, the Government devised a scheme to keep new businesses afloat that were struggling with gaining funds. £1.3bn of funds were made available. However, it looks like this was a nice idea but isn’t really working in practice. Many companies have been refused loans from now cautious banks because of bad credit ratings or general confusion. Stephen Alambritis, a spokesman for the Federation of Small Businesses (FSB) said that the banks were not up to speed with the rules of the schemes, so businesses are going in and asking for money and being given preconditions that only applied to the old schemes.
So, looks like banks are too worried about this ‘recession’ malarkey to actually help out the businesses that are having the worst time for it. But with a pitiful ~£12m borrowed (less than 1%) of the total, it looks like it was a token gesture so far at best.
Nathan Current Affairs bank, FSB, loans, r-word
Unsurprisingly, the AA wants people to buy cars. While this is not news itself, there is a slight difference this time. As the world is steadily turning browner and hotter, there’s a large push for countries to be as ‘green’ as possible. The Germans tested a scheme where they offered up to €2,500 for cars older than 9 years, and have so far seen 400,000 vehicles being scrapped in favour of new ones. And new ones are blatantly better for the environment. Or something.
So the AA want to lend us more money by getting the Government to subsidise us lending money. Does this sound slightly familiar to you? Still, I wouldn’t say no to £2k towards a new car.
Looks like it’s time to buy an old car for £50, just in case…
Nathan Current Affairs
With news that Mervyn King, the guv’nor for the Bank of England is saying that we’re going to have a ‘deep recession’ it seems that many of my blog posts have become more of ‘recession watch’ rather than actually talking about what’s happening on the loans front. With highly predictable crises in lending, and it becoming ever more difficult to get a loan, it sometimes seems that I started up this blog at the wrong time.
With news that the U.S. is going to be throwing an astronomical £1.4 trillion at their banks, it seems that all the governments in the western world are desperately trying to get banks to start lending again. The only question I have is ‘do people really want to borrow money in this climate?’. Of course people will always get mortgages for houses, but the thought of borrowing money when it’s becoming increasingly likely that you won’t have a job by the end of the year (unemployment has reached almost 9% in the North East) just doesn’t seem very appealing.
Is it all bad news? No. Interest rates are the lowest they have been for an incredibly long time, which makes it cheaper than ever to borrow money, and with interest rates going to stay below 2% for at least 2 years, it seems that even a variable rate loan will have a consistently low interest rate. It’s not that much harder to get a loan unless you’ve got a bad credit rating, and Zopa’s loan rate (based on a 5k loan over 3 years) has dropped to 8.2%!
So if you’re looking to buy a new car/go on holiday, buy it before the recession deepens and the pound becomes worthless abroad. Oh, and of course, follow my loan guide before you step into that office with the ticking clock.
Nathan Current Affairs, Loan Advice bank, loans, personal loan, r-word, recession
Barclays have reported that they’ve made £6.1bn pre-tax for last year. Although that’s 14% less than their profits for 2007, it’s still better than the losses for RBoS and Lloyds TSB. It’s still making money. Which is not what the FSA said last year when it was decided Barclays was ‘dangerously’ short of capital. So how are Barclays still making money? Are the figures telling the whole truth?
Part of the reason is that they’re not paying bonuses to bankers at the moment. Although that’s probably annoyed the bankers, all of us mortals have breathed a sigh of ‘thank God’. Understandably, people have been just a little upset that some of the banks that have been bailed out have also paid bonuses. Why? we cry, do they get rewarded for such epic failure?
I’m getting a little off-topic here, I apologise. Another way that Barclays is making money is because the Sterling is falling, foreign assets are now worth more money in the UK. And Barclays has a lot of assets. In total, including assets and liabilities it has over £2 trillion. That’s rather more than the entire annual output of the UK.
It’s a maze of lending and spending, and the giants will survive. But Barclays seem to have sacrificed their future for short term goals. Sorry folks, no good news today.
Nathan Uncategorized bank, barclays, r-word, recession