The Dodgy Lenders Rant: Nimble it and move on my arse.
I am sick of these damned adverts on TV that try to convince you to borrow little bits of money because it’s easy. The worst offender is the one that goes:
Just Nimble it and move on.
As if they would ever let you move on. As if you can just forget about it.
It’s false advertising and it should not be on TV. Even on their website — which I will not link to — the ‘How To’ page has three steps, the last one being
Once approved, get paid fast
no fourth one saying, “We pursue you for the money by whatever means necessary and charge remarkably large fees.” But look a bit deeper (and I’ll admit, there is a ‘Costs’ link on the front page):
If you borrow between $100 – $2,000 you’ll pay:
- Establishment fee of up to 20% of the principal
- Monthly fee: up to 4% of the principal a month (this is PER MONTH, not per annum — see next section…)
If you between $2,001 – $5,000 you’ll pay:
- Establishment fee: up to $400
- Interest charges — approx. annual percentage rate of 39.20%
- Comparison Rate: 56.60% p.a.
(A comparison rate converts the various costs to an effective intereate rate for a comparison with other products.) Now, at present a home loan interest rate is about 5% and even an unsecured loan through one of Australia’s ‘Big 4’ banks is around 16%. A far cry from 56%.
In short, a product like this prays on people and makes it worse by making it easy and fast, and by using phrases that make it sound like there is no tomorrow to worry about.
A dig around in the ‘full fee statement’ shows this:
They’ll charge you $5 per day “to cover reasonable costs of administering your account while your account remains in default.” Now this is clearly crap — there is no way it costs $5 per day to ‘administer’ any standard account/loan product, unless that $5 per day is to help pay for the legal team that’s going to descend on you.
They’ll charge you $15 per instance every time you were supposed to make a payment and don’t. Again, apparently this is ‘reasonable’. From the point of view of a business that wants to make a lot of money I suppose it is.
Doesn’t sound like they’re really going to let you ‘move on’ once you’ve borrowed the money. That tag line is so incredibly disingenuous it should win some award.
I know sometimes people need money fast. I know sometimes they have few alternatives and no way to secure a loan. I know that sometimes disaster strikes and even a bad deal is better than no deal.
But it still rankles.