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M119 - Short Term Cash Loans Motion watch

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    M116 - Short Term Cash Loans Motion, TSR Labour
    This House believes that the APR (Annual Percentage Rate) utilised by short term cash companies such as 'Wonga,' informally known as 'Loan Sharks' is inexplicably high. We believe that while these companies are still permitted to take advantage of customers, who are often in vulnerable financial situations, the public of the United Kingdom will neither gain faith in the government, nor be able to improve their own finances.
    This House believes that their should be a cap on both nominal APR and effective APR, and that these companies must display their simplified interest rates, with a clear way for potential customers to understand how much interest they would owe if they took out a loan.

    This means:
    -Nominal APR: loan + simple interest
    -Effective APR: loan + loan fees + compound fees

    The way that these companies display their information is often confusing. While they may, on their websites, says that 'APR=3145%,' their p.a. interest may actually be 300%.Members may agree that this is clearly a large difference. However, Members may also agree that 300% p.a. is a large interest rate in itself.

    Many people who take out short term loans do so because they are very short of money and need to find a quick way out to pay for a bill, for example. However, this cash may often not immediately appear in their pockets, and, unlike when paying back a friend a small loan, cannot be paid in small chunks over a few weeks. Some companies offer a multiple instalement service to customers, however this means that even more money is owed back in fees and interest. And if customers are unable to pay back this money in full by the allotted time, the companies will just keep building your interest until the cost spirals - and then they won't stop.
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    aye, about time something like this was suggested.
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    Nay. Certainly, the companies should display information in a clear and easy to understand way, but capping the rate would effectively kill the industry. Now, I'm sure the people who advanced this petition would not be too fussed about such an eventuality, but the industry dying would adversely affect the people who need emergency funds. Especially in the current environment where banks are cutting down on credit to 'sub-prime' borrowers. The high interest payments are an incentive for people to put money up for those who are in desperate need of credit - without them, you have no lending and the economy would suffer further.

    There is a point though, as I said previously, about having clearer communication of the terms of individual contracts. But that is a contractual issue, to which there a numerous existing remedies although more awareness for the parties involved is definitely needed.
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    Welcome Squad
    Don't forget to use discount code 'TV25' for your exclusive 25% off! :awesome: :teeth: :top:

    :mmm:
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    Incorrect use of inexplicably, but apart from that a definite aye from me. These companies are cancer.
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    Aye - it's a growing problem and action needs to be taken. I'm not sure that we needed an essay though.
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    Whilst transparency should be encouraged people are ultimately not forced to take out such loans and so it is the decision of the consumer as to whether they take out such loans.

    'No'.
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    (Original post by Rakas21)
    Whilst transparency should be encouraged people are ultimately not forced to take out such loans and so it is the decision of the consumer as to whether they take out such loans.

    'No'.
    these loans are targeted deliberately at people who are desperate for money.

    they take out the loans because they may feel they have no other choice and the companies take advantage of this to exploit them with extortionate interest rates on the loans.
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    (Original post by Rakas21)
    Whilst transparency should be encouraged people are ultimately not forced to take out such loans and so it is the decision of the consumer as to whether they take out such loans.

    'No'.
    Depends on how one is defining "forced" because it is completely meaningless in this context if you mean it literally. The crippling debt also filters down and has serious consequences for the children of exploited families and on crime levels and the government. These companies may not be directly compelling but that is a very poor argument for their not being regulated. People who take these loans are often already receiving state help, they then have to meet repayments and either turn to crime or to cash in hand jobs by necessity. I can't say I have ever paid much attention to you but my assumption is that you are a free market = free people kinda guy so I suppose I'm the head and you are the wall.

    It is exploitative.
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    (Original post by Rakas21)
    Whilst transparency should be encouraged people are ultimately not forced to take out such loans and so it is the decision of the consumer as to whether they take out such loans.

    'No'.
    To be fair no they aren't forced, but they feel like it and these companies should cease preying on people who are struggling. We as a society should be appalled that such things can happen. We prosecute loan sharks, yet we turn a blind eye to companies with licenses doing exactly the same thing. It's morally repugnant.
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    (Original post by SciFiRory)
    these loans are targeted deliberately at people who are desperate for money.

    they take out the loans because they may feel they have no other choice and the companies take advantage of this to exploit them with extortionate interest rates on the loans.
    That may be the case however in my opinion people are far too unwilling to consider cutting spending for example, selling 2 of their 3 TV's and so that is their choice.

    (Original post by paddy__power)
    Depends on how one is defining "forced" because it is completely meaningless in this context if you mean it literally. The crippling debt also filters down and has serious consequences for the children of exploited families and on crime levels and the government. These companies may not be directly compelling but that is a very poor argument for their not being regulated. People who take these loans are often already receiving state help, they then have to meet repayments and either turn to crime or to cash in hand jobs by necessity. I can't say I have ever paid much attention to you but my assumption is that you are a free market = free people kinda guy so I suppose I'm the head and you are the wall.

    It is exploitative.
    I certainly do support their regulation as with any bank however i will not support an authoritative state telling people how much interest they can charge when people can go a cheaper competitor.

    Indeed, i am a free market guy (economic right, socially centre-liberal).

    I certainly would not encourage these loans but liberty dictates that the people be able to buy this product if they wish.

    I am actually probably going to have to take one out to buy a new computer.
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    (Original post by toronto353)
    To be fair no they aren't forced, but they feel like it and these companies should cease preying on people who are struggling. We as a society should be appalled that such things can happen. We prosecute loan sharks, yet we turn a blind eye to companies with licenses doing exactly the same thing. It's morally repugnant.
    If these companies act like sharks in the sense of breaking peoples legs then yes they should be shut down but people are not preyed upon, they need money and make the choice to pay high interest.
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    (Original post by Rakas21)
    That may be the case however in my opinion people are far too unwilling to consider cutting spending for example, selling 2 of their 3 TV's and so that is their choice.



    I certainly do support their regulation as with any bank however i will not support an authoritative state telling people how much interest they can charge when people can go a cheaper competitor.

    Indeed, i am a free market guy (economic right, socially centre-liberal).

    I certainly would not encourage these loans but liberty dictates that the people be able to buy this product if they wish.

    I am actually probably going to have to take one out to buy a new computer.
    Well fair enough. I obviously disagree but I've been around the block enough times to known when the difference between myself and somebody else is not going to be closed by persuasion so I will save us both the time and not bother. It just doesn't make any sense for anyone other than those companies for the situation to be allowed to continue unhindered. :dontknow:
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    (Original post by Rakas21)
    That may be the case however in my opinion people are far too unwilling to consider cutting spending for example, selling 2 of their 3 TV's and so that is their choice.
    :rolleyes:

    not everyone has spending to cut or tv's to sell y'know...

    also, it seems incredibly unfair to say to people "sell things you like or cut back on spending that may well be on things as important as food OR be exploited", the choice you speak of seems to me to be largely illusionary unless you are lucky enough to be rich enough to not have to worry about that choice to begin with...
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    I am torn on this issue, personally I feel that the companies should make it clearer what their rates are but then again, I dislike how high their rates actually are.

    I will have to abstain.
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    Nay, it's another motion from Labour trying to use the government to account for other peoples' stupidty, just like the trains motion.

    Anyone with half a brain can see the "1694% APR" label on the adverts (or whatever the actual figure is). Whilst I think that borrowing money at such a high rate is an absolutely ridiculous idea, I still think that people should be free to use their intelligence to weigh up the advantages/disadvantages and make their own decision and that companies should be allowed to do whatever they want with regards to this. It's not as though they're tricking people in to debt, anyone stupid enough not to notice the extremely high APR and still sign on to the deal deserves what they get.
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    Wholeheartedly agree with this motion. I congratulate my Honourable friend the Shadow Business Secretary for tabling this motion to the House which will finally address the issue of charging excessive interest rates to often vulnerable people.
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    (Original post by Jarred)
    Nay, it's another motion from Labour trying to use the government to account for other peoples' stupidty, just like the trains motion.

    Anyone with half a brain can see the "1694% APR" label on the adverts (or whatever the actual figure is). Whilst I think that borrowing money at such a high rate is an absolutely ridiculous idea, I still think that people should be free to use their intelligence to weigh up the advantages/disadvantages and make their own decision and that companies should be allowed to do whatever they want with regards to this. It's not as though they're tricking people in to debt, anyone stupid enough not to notice the extremely high APR and still sign on to the deal deserves what they get.
    If I ever meet you I'm going to smash you so hard in the mouth

    If you don't have the money to feed your children you will take one of these loans, for example. To conclude that anybody who falls foul of this particular exploitation is stupid - as you so clearly do here - is so offensive and so completely disgusting that I am not sure that I am even joking about the above. This is just everything that is wrong your party wrapped up in one post and frankly some of the better members of your party should be ashamed to share a platform with you.
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    Aye. Wonga, AKA a legal loan shark, should be banned as it is exploitative and reprehensible.
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    (Original post by D.R.E)
    Nay. Certainly, the companies should display information in a clear and easy to understand way, but capping the rate would effectively kill the industry. Now, I'm sure the people who advanced this petition would not be too fussed about such an eventuality, but the industry dying would adversely affect the people who need emergency funds. Especially in the current environment where banks are cutting down on credit to 'sub-prime' borrowers. The high interest payments are an incentive for people to put money up for those who are in desperate need of credit - without them, you have no lending and the economy would suffer further.

    There is a point though, as I said previously, about having clearer communication of the terms of individual contracts. But that is a contractual issue, to which there a numerous existing remedies although more awareness for the parties involved is definitely needed.
    Define need

    Hint: Without running into the definition of a crisis loan.
 
 
 
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