Rollovers? Only For Lotteries!

Posted on: 07/03/2013

I love a little flutter on the Euromillions Lottery, especially when the prize is up to this week's level of £44m.

Of course, the big prizes only become available through the passing of a number of weeks when the lottery is not won. As most of us now know, this is called a "rollover".
So rollovers deliver big prizes - and not just in the lottery industry.

I read this week that Pay Day Loan companies make at least 50% of their profits from loans that rollover.

Since most people are paid monthly, one can assume a "rollover" of a payday loan means the loan is extended from one month to two.
But what does that mean in cash terms for the borrower?
Well, the average payday loan is about £250.

Wonga, the biggest payday loan outfit, say they charge an Annual Percentage Rate of over 4000%.

So if you borrowed £250 from Wonga and did not pay them anything for a year, at the end of 12 months you would owe them over £10,000.
A friend of my Nephew took out a payday loan. Silly boy: he rolled it over. 

When he couldn't pay it back, he told his lender.  They gave him the phone number of an "associated" company that could "help". That "help" lead to a tripling of the debt within a few months.

Theft to pay back the loan, but never enough stolen to actually clear the debt.
The final outcome? A potential jail sentence for fraud .
So, let's hear no more about rollovers for payday loans.

They should be banned by law, with immediate effect.

Also, no multiple loans should be allowed.
One loan per person should be the rule.
With those simple changes, the problems caused by payday loans will be reduced to almost zero.
It will also mean the companies providing the loans can no longer afford to pollute our telly screens with their sick-making promotions.

If payday loans are a necessary evil for some, we must always remember just how evil they can become.

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