Another terrible loan product

We had Payday loans and now there’s another product out there targeting, vulnerable people:
Guarantor loans

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Having worked in the finance industry since I was 18 (now 20 years ago :flushed:) including 6 years as a business manager it gave me an interesting insight into the relationship between people when it comes to money. Including how unreliable people suddenly become when you mix friends/family and money.

As soon as Amigo loans started business I knew it wouldn’t take long before something like this would happen.


It won’t be a very popular opinion but I don’t think the product is terrible or it’s the lenders fault.

It offers credit which is necessary to some people who couldn’t get it otherwise through ‘normal’ providers.

The person in this article couldn’t afford to book a holiday, so took a loan to book that as well as to cover other existing debts? It just sounds ridiculous. I don’t know why anyone would agree to be their guarantor.

The product isn’t a bad one, it offers a solution to people who need it. Booking a holiday doesn’t seem to me a good enough reason for taking a loan, or guaranteeing one…


That bit in the article stressed me out hah


Still very much in place to take advantage of vulnerable people, 49.9% APR !!

Unless an emergency and you had no other option, and even then :thinking:

I don’t see why anyone who was close enough and cared enough to be your guarantor would…

But what does “vulnerable people” mean in this case?

People that live beyond their means?

People that can’t comprehend what interest is?

What about the holiday company who took £5k off this woman? Isn’t that also irresponsible?

I’m not sure how different loan products are to blame. People need to learn to live off what they earn and we need to stop this debt culture we live in.


Isn’t this just increase the risk for the lender of high risk loans?

Yeah I agree with this whole heartedly, but then I wonder whether its an education thing for people to be responsible with their money

Unfortunately not that easy when every advert on TV encourages it. Whether it’s payday loans, car finance, buying that new PC etc. It’s just the society we live in and it’s not good.

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My personal definition would be someone who irresponsibly takes out a loan for a non essential purpose and doesn’t understand their rights and regulations when it comes to paying it back.

The question is how? Through education?And teaching people you don’t need that holiday and ignoring Snapchat etc. There is part of the debt culture where wages are so poor that you sometimes need a payday loan to get through the month in the event of an emergency.

Of course.

The people who take these loans have got to take some responsibility too. A 10 second search on the internet would have advised them against it or suggested far better alternatives.

It seems like they’ve just gone direct to a random website, not read any T&Cs and basically just clicked 'next, ‘next’, ‘next’. I know it harsh but sadly they’re going to have to learn the hard way for their irresponsible behaviour :slightly_frowning_face:

The actual product isn’t terribly bad - Guarantor loans aren’t new and for the most part “work” for both sides. Lender has someone to go to should the borrower default, and borrower has something to offer as security.

The problem is understanding how much you’ll pay back - this sort of loops back to the overdraft “£x per day” or “APR% rate” unfortunately those that are seeking out these loans are unlikely to understand or appreciate the consequences of taking out a 40% loan.

I don’t think we will ever get into a position where no one will be seeking out loans or be debt free - it is a natural part of our economy unfortunately. However, I wouldn’t say that those who get bitten by these loans are for the most part “vulnerable”. If they are simply going:

That is their problem and something they need to address.


I do wonder whether you should have to answer a quiz so you understand what you’ve read. I had to do one for a investment account


You had to do a quiz when you wanted invest in Monzos last crowdfunding round too :slight_smile:


It seems strange that a lender will have to go through many different affordability checks when you take out a mortgage (which has a definitive security) whereas with loans that have an extortionate APR % there seems to be no responsibility on the lender.

It is quite alarming how easy it is to obtain credit these days. Again, maybe money management should really be taught at school. As you can’t always rely on people to teach their kids. Especially when you need a loan to afford a holiday…


Yeah its strikes me as very very odd indeed. But then is it the lack of resources and education that give them a good target as such

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Didn’t legislation change recently whereby they had to make the terms more clear?

Generally it says you’ll pay X per month and X overall quite clearly now whenever I’ve looked.

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Unfortunately the issue is also that people are educated as to how interest works - it is basic maths. But the consequences of what that actually means is forgone because of the ‘holiday’ or ‘the newest phone’ - I do feel genuinely sorry for those that need things like these predatory loans to get by month to month. But for those spending thousands on holidays (well out of their means) is foolish and I don’t think you can really teach people that fit into that box.

Whilst not legislation, I think the FCA have cracked down on the practice since Wonga and co decimated the market - not sure if it is a requirement to show a calculator, otherwise, who would choose such loans?

It’s not alarming, credit is a good thing. It’s like saying it’s alarming how easy it is to access fire these days.

True but after working with the general public for many years you’d be surprised at how some people get through general day to day stuff never mind things like this :laughing:

Referring back to this article, if I was refused a loan and the only way I could get one was with a guarantor - alarm bells would be ringing already. I’d want to improve my score first and find out why I wasn’t eligible - which in turn would educate me and lead me to a far better solution.There’s so much resource available.

You can only guide people so far but if they lack common sense there isn’t much more you can do. There are good uses (in some situations) for these emergency loans but it’s going to be the minority again that ruin it for everyone else.