“You can lead a horse to water, but you can’t make it drink” - feels quite appropriate here.
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49.9%???
Blimey I thought my Tesco loan at 6.5% was terrible enough.
I was just talking to my lady about this yesterday. There is a massive issue with people keeping up with the Jones when they cannot afford to. Everything from cars, holidays to iPads can be financed and whatever rate just cause people can’t wait to have something.
I understand there are times where it has to be done, I got a loan for a car in December as my last car was just beyond economical repair. The difference being the car is not what I would consider “flash”, no one is going to break their neck as a drive down the street and my intention is to overpay it as soon as I can to get it paid for and out of the way. In an ideal world next time I need a car I have the cash I need save up to go on top of the cars value 2-3 years down the line.
There is a difference between being able to reliably being able to travel to work and then thinking I want to go to Florida for two weeks cause I deserve it then spend the next 2-3 years paying for it.
I’m no financial expert but the experience of clearing up my credit report and saving for a house what everything I needed to to see how the world of money works and what is positive debt and what is negative debt. Loads of resources out there on YouTube (easy to consume), Spotify podcasts and on the web but people.need to look for them. Dave Ramsey, money to the masses and meaningful money podcast to name a few.
I do agree there is a point where it clicked in my head and then I thought why isn’t this taught is schools but on the same vein for some people they don’t pay attention till they are in a whole or they are naturally good with money and want to see how they can be better with it.
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I thought some secondary / comprehensive schools were starting to teach money skills and understanding Apr and different types of interest.
If it’s not, then it should be taught in all schools.
As has been mentioned before this country is particularly prone to buying things on credit and pay for them later. In plenty of other countries people save. Admittedly with saving rates so low, there isn’t much encouragement to save.
I don’t have a problem with the idea behind the product but the Apr is obscene. It’s clearly setup for people who can’t get credit elsewhere, are likely to default or miss payments. It is just screwing over those who can least afford it. In my humble opinion.
I somewhat agree with you. They are very much operating in the grey area of lending but there could be someone with bad credit who does want to buy a car with a loan. I’m not sure what is in the application process but there is nothing stopping me saying I’m going to buy a car then deciding me and my good lady “deserve” to go to Florida for 2 weeks.
I dont think they have a “woe is me point” when they are desperate for money so a lender gives you it then claim they are trapped with payment which they agreed to.
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I watched panorama the other day and there was a woman who took out a £10k loan from Wonga for a holiday because she claimed that she deserved it. She did it over 5 years and after she came back realised that she was struggling to make payments.
It’s all well and good needing a holiday, I think everyone deserves one but it needs to be in proportion. Taking yourself to the brink of your financial limits and leaving yourself with no margin for error (emergencies and unexpected bills) isn’t wise. There are plenty of really nice places to go away in the UK without the need to spend £££ going abroad too.
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Interest is taught in schools and is in effect basic mathematics - the problem is the real world application of that maths.
You can teach/ tell someone what interest is how it works and when it is good/bad but what you can’t do is teach someone how to manage their own money. Because people will want things because they want things, and because credit is so easily accessible they can get those things without the immediate consequence of having to pay out of their own pocket. It is only further down the line, they realise what a bad deal they ended up with.
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Another example as above. Someone has gone to look at a car to get to university and thier part time job so goes ahead and gets an Audi A1 and then complains the car payments arent fair. Quite happy to look fancy in your brand new Audi and impress people on the road that you will never meet to think “what if” or can I really afford this.
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I do wonder though if pressure tactics and other persuasive tactics are used in order to get their signature. But conversely as you say people need to get into the habit of doing their own affordability checks
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Blimy, I thought I was flash at 38 with my 2011 Nissan Note. 23 with an Audi A1!!! A student with a part time job…
Also the calls for people to do affordability checks when they get car finance, its a car dealership, there’s a big conflict of interest there between the salesman and interests of the customer.
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This isn’t new really. When I went to university, I needed a guarantor for my student accommodation. The potential guarantor needs to say no to guaranteeing anything. Either find a better way or not not at all. Simple. I wouldn’t do it.
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