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Pay-day loans to be capped

Forums New posts
In the right circumstance, one of these loans could be a good thing.

A year ago I saw a guitar in Cash Converters for £950. I knew full well it was worth over £1500. I might have got a PDloan, sold the guitar next days for £1500 and paid £25 for thee loan (for example) and pocketed a nice profit.

As is was, I kept the guitar!
 
RobM said:
In the right circumstance, one of these loans could be a good thing.

A year ago I saw a guitar in Cash Converters for £950. I knew full well it was worth over £1500. I might have got a PDloan, sold the guitar next days for £1500 and paid £25 for thee loan (for example) and pocketed a nice profit.

As is was, I kept the guitar!
Click to expand...

If you had taken out a payday loan you would have been knocked back for any future mortgage.
 
[video=youtube_share;4cGMGvm_L5A]http://youtu.be/4cGMGvm_L5A[/video]

Pubey said:
that's absolute rubbish.
Click to expand...

Yet again you don't know what you're talking about.

This is exactly what Wonga's boss was being taken to task over, on Newsnight a couple of weeks ago, by Kirsty Walk.
 
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Tangled up in Blue said:
Yet again you don't know what you're talking about.

This is exactly what Wonga's PR man was being taken to task over, on Newsnight a couple of weeks ago, by Kirsty Walk.
Click to expand...

"Within the last few months" is totally different to what you said. Obviously they will ask why you took out a short-term loan for a small amount just a few months before you go and try and get a loan that is about a thousand times more.
 
chapperzUK said:
"Within the last few months" is totally different to what you said. Obviously they will ask why you took out a short-term loan for a small amount just a few months before you go and try and get a loan that is about a thousand times more.
Click to expand...

Credit to you for watching the video.

However in a subsequent Newsnight report there were cases of punters having being refused a mortgage after they'd taken out a payday loan.

http://www.bbc.co.uk/news/uk-25098810

"Nearly two-thirds of brokers contacted by trade publication Mortgage Strategy for Newsnight had a client turned down for a mortgage after a payday loan.

A record of a loan will remain on a credit record for nearly six years.

...According to evidence gathered by Newsnight, many mortgage applications have been instantly declined and credit scores adversely affected after people took out payday loans.

Out of the 279 replies received by Mortgage Strategy, 184 brokers said they had clients in such a position."
 
Halifax are an example of a lender who have said that use of a payday loan is treated exactly the same as any other unsecured loan. The survey you mention by Newsnight claimed that "two-thirds of mortgage brokers said they had a client turned down for a mortgage after a payday loan". We don't know how the questions were framed, but that's not 100% as your post suggested.

Stop making sweeping statements.
 
Seems sensible to me , why would you want to lend a considerable amount of money to someone who has financial control which involves a payday loan.
However Robs case shows an intelligent use of the short term loan systems which should not compromise any future lending
 
Tangled up in Blue said:
According to evidence gathered by Newsnight, many mortgage applications have been instantly declined and credit scores adversely affected after people took out payday loans.

Out of the 279 replies received by Mortgage Strategy, 184 brokers said they had clients in such a position."
Click to expand...

But were they turned down because of the loan, or for another pre-existing reason that the loan may well have also been a by-product of?

and no, I'm not in favour of pay-day loans as they stand
 
Pubey said:
Halifax are an example of a lender who have said that use of a payday loan is treated exactly the same as any other unsecured loan. The survey you mention by Newsnight claimed that "two-thirds of mortgage brokers said they had a client turned down for a mortgage after a payday loan". We don't know how the questions were framed, but that's not 100% as your post suggested.

Stop making sweeping statements.
Click to expand...

No, but it's a minimum 66%.
 
Tangled up in Blue said:
No, but it's a minimum 66%.
Click to expand...

If 279 had been asked and 184 said they had at least 1 turned down after having a payday loan. That would suggest that at least 184 have been turned down after having a payday loan. So if these 279 brokers only had 1 client, then your percentage is right. However, there are no real figures to make any estimation at a percentage of people who have tried to get a mortgage after having a payday loan.

How many of those that were turned down were turned down because they had a payday loan and solely for that reason? It doesn't say, it just puts 2 and 2 together with the suggestion of the cause.

If you were to find out the real affect that a payday loan might have on a mortgage, there are several factors that need to be considered.
 
Tangled up in Blue said:
Like this one,you mean? :winking:
Click to expand...

The point being, my sweeping statement was factually correct - You're talking rubbish and have no evidence to suport your statement that anyone using a payday loan will not be able to get a mortgage. Halifax said that they treat payday loans like any unsecured loan. I guess the majority of people who get a mortgage will have some form of unsecured loan (car loan etc) and won't have major problems borrowing. From what I've read an unsecured loan tends to affect the amount in total that you can borrow, rather than whether or not you're accepted.

Chapperz has eloquently discussed the issue about the causal link between having a payday loan and acceptance for a mortgage. I doubt anyone is denying that a payday loan, much like any other debt, it going to affect your ability to borrow... however saying that it's not possible is stupid and wrong (according to Halifax at least, and I trust them more than you).
 
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