Why we’re lending


(Kieran) #70

(Steve) #71

It’s a clickbait headline.

Even the article states it’s not going to become a payday loan company.


(MikeF) #72

As you suggested, I’ve moved these posts to the lending thread :smile:


(Neil M) #73

The ethics behind the potential move I would argue are laudable. At the end of the day Wonga will be sold to someone. That company will still have the rights to collect on the loans. Depending on who its sold to that could be a company who keeps the interest the same and exploits vulnerable people, or alternatively it could become part of Monzo, who know how to work with vulnerable people and would I assume reduce the astronomical interest rates and also focus on helping the people avoid debt and become debt free. This I think could help bring Monzo a lot more positive media attention but also conversely obviously lead to article rubbish but also increased risk but then are these people so called risks because they can’t pay back the ridiculous interests and become hugely in debt and are labelled risks because a £100 loan ballooned into £1000s


(Natalia) #74

I completely agree with you, @PaulUK. I am of the opinion that all overdrafts and loans are evil. Someone came up with this idea to get rich and are exploiting people who do not have control over their spending habits.
Never took a loan in my life, never had an overdraft also. I think these only encourage people to spend more (obviously). I completely understand if someone takes a loan for an emergency (which thankfully, happens very rarely) and doesn’t have enough savings, but to take a loan to buy a new TV, a car or go on a holiday? This I do not understand.
I was always taught - If you can’t afford it, then you can’t have it. Just yet. Saving and patience is the best policy. Or, find a way to earn more money and then you can buy whatever you want!


#75

I’m unsure how you can see them as evil. A person chooses to take one out, and agrees to the terms. It’s a product for those to not abuse, and especially not to take out if they can’t afford it.

It’s not an exploit though, they just need to spend within their means. If I spent £300,000 on an expensive car then declared bankruptcy, would any of you have sympathy? No, because I’d be living out of my means. It’s not fair to fault the guy offering something. They don’t have to take it.

I personally think loans are meant for big purchases like cars, where you need one now, make enough to afford it split monthly but don’t have the capacity to save for one in a month or two. Overdrafts imo are meant to bridge bill payments.

If someone is living outside how much they make, then that’s on them. If your job isn’t paying enough, you certainly don’t take loans to bridge the gap.


(Michael) #76

Interested to know your views on mortgages. Is that surely not the very definition of borrowing money to afford something you could not otherwise? But that is not something even the Debt Free Wannabes board over on MSE would consider bad debt


(Michael) #77

Mortgages are just loans after all


(Natalia) #78

Yeah, same for the mortgages. I am happy to rent for the time being. I just can’t bear the thought that a bank, which already has billions, would make even more money by charging me interest. I also don’t want to be tied up to something for 25 years.
I know that millions of people live like this and that’s fine, that’s the system that was built up for us. I’ll try to steer clear for as long as I can :slight_smile:


(Michael) #79

Okay, you get thumbs up for consistency of viewpoint at least :slight_smile:


(Natalia) #80

@MichaelMayes :wink:


((╯°□°)╯︵ ┻━┻) #81

I’m fine with interest, you’re technically paying for a service just like when you buy a cup of coffee. As mentioned, nobody forces you to take out loans.

It would be foolish for a bank to take all the risk and lend money for free. They’d go bankrupt in no time.


(Natalia) #82

Of course, I get that:) I just choose not to give them any of my money, that’s it :slight_smile:


#83

In Muslim countries you would see loans for free, and Islamic banks still work somehow. In the Koran it mentions that you’re not allowed to take or pay interest.


(Neil M) #84

They still pay you and charge you money.


Investopedia explains it quite well


#85

Based on a share of profits in your business? This only works if your business is doing well, otherwise there are no profits?


(Neil M) #86

If your business fails they then try and reclaim the money through asset selling, if that fails they will get a court order to put you in prison(This heavily depends on the jurisdiction of the country you are operating in!).
I agree that this only works if you are doing well, I would assume this is why in an ideal world they would try and lend to businesses with good profits etc.