4 River The
Friday February 17 - March 1 2012
Loan companies cash in Kelly Alford set out to see just how easy it would be for Kingston students to be approved for a payday loan. All companies were asked for a loan of £300 for a 30 day period based on a hypothetical income of £750 per month of which no evidence could be provided. Here we reveal the online and High Street companies that offer roll over loans and referral discounts to unsuspecting students. • £250 loan approved • Interest only rollover offered • £100 offered when loan rejected by reporter • Roll over loan encouraged The Money Shop, located on Castle Street in Kingston, offers students, who are in employment, payday loans both online and in store. The website states that The Money Shop requires customers to bring a bank card, bank statement
•Cash advances and personal finance options •1476 per cent APR •Income evidence required Cash Converters on Tolworth Broadway, Tolworth, rejected a request for a cash advance of £300, stating that this sum of money on a short term basis would usually only be offered to returning customers who were proven reliable to repay.
They did offer a personal loan of the same amount over a six month period with an APR rate of 1,476 per cent. The loan required monthly repayments of £103.30, meaning the total amount to be repaid would be £621. To be accepted however, Cash Converters required bank statements, wage slips, utility bills and identification in the form of a driver’s licence or passport.
What they said:
“We are proud of our robust, responsible lending policy. As part of this we have a number of rigorous checks in place to make sure that the customer is financially stable before we offer to lend any sum of money. “Before completing an application form we require customers to share
The second shop, Cash and Cheque Express on Victoria Road, Surbiton, were much more stringent with their regulation. No loan was offered without MoneySavingExpert.com creator Martin Lewis blasted the advert as “morally offensive” on Twitter and the student section was later removed by Wonga. “The idea you should get a Wonga loan rather than a student loan is outrageous,” said Lewis. “Student loans only need repaying when you earn over £15,000 and the repayment is proportionate to income. They don’t go on your credit file, there are no debt collectors.” Wonga is just one of many payday loan companies to start tar-
geting students. Cash Genie also removed certain adverts from their website after they were criticised for encouraging students to use their high interest loans to fund social events. The advert stated: “Our easy loan service can be used as a short-term benefit to pay for your desires (alcohol, gigs, going out, new clothes, presents for others).” Steve Perry, author of When Pay Day Loans Go Wrong, branded Cash Genie irresponsible and said that payday loans could only work
questioning whether taking out a smaller loan for £100 that day would be helpful.
What they said:
“The Money Shop is a professional short-term lender, fully regulated by the Office of Fair Trading and only offers its payday loan products to those with a bank account and with an income. As a founder member of the Consumer Finance Association, The Money Shop abides by its code of practice as well as supporting efforts to enhance the code further. These include a wide range of consumer protections which will drive up standards within the sector.”
two forms of identification as well as bank statements and wage slips to demonstrate proof of earnings. If we feel that the customer isn’t suitable for a loan or cash advance at this time we provide details of debt advice charities where the customers can go to get free debt support.”
• Income evidence required • £85 loan cost £15 • Cheque book required • Minimum wage needed
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and wage slip to be considered for a loan. However, when a reporter for The River tried to apply for a loan, only a bank card and proof of identification were needed. The Money Shop approved a loan of £250, with a total repayment of £312.50. The Money Shop also said that if the loan could not be repaid after the 30 day period, customers had the option to just pay off the monthly interest, in this case £62.50, and the borrowed amount could be rolled over for another 30 days. When our reporter attempted to leave the shop to consider other options, the cashier pressed on,
if the full sum of money plus interest could be repaid on time, which is unlikely for students. “We are supposed to be looking at a responsible lender here,” said Perry, who spiralled into debt after taking out over 60 payday loans in one year. “Stating that the essentials of a student loan is to pay for partying is simply unacceptable.” Government funding for university is specifically tailored for students and the interest rate is always proportionate to the rate of
recent bank statements and wage slips being provided. The cashier highlighted that their loans were for a short period only and that the minimum income usually required for a cash advance was £1000 a month. A loan of £85 cost £15 and required a post-dated cheque for £100, which would then be cashed on the agreed repayment date.
What they said:
inflation. Current students will not have to start repaying their loan until they are earning over £15,000 a year, which will rise to £21,000 this year when higher tuition fees are introduced. Due to the short term nature of payday loans, APR rates can reach into the thousands. They are intended as short-term solutions and are often accepted with very limited credit checks, making it easier for the financially vulnerable to be approved. Debt can begin to spiral if pay-
ments are missed or if more than one loan is used at a time, however many companies still offer larger sums of money to returning customers. President of Kingston University Students’ Union, Christopher Dingle, said that the companies were run “unethically” and were “designed to snare you as a trap” with their high interest rates. “Payday loans are a dangerous source of quick cash to play with. They [make it] very easy to get into a downward cycle that can quickly
“We check details are correct to ensure people are not overstretching themselves into worse debt. Many loans are readily available but not here unless they are in full time employment.”