My stepson's insurance renewal notice from a well known chain of brokers showed the rate of interest, if paid in 10 instalments as 65.30% per annum.
This is approaching the rates for Mafia loan-sharking operations (and the small print also helpfully points out "you have no right to cancel this agreement under the Consumer Credit Act 1974 " )
A quick internet search found him a lower premium and an instalment scheme with a reasonable interest charge but I wonder how many people are innumerate enough to sign up for finance at 65.30%?
Or does anyone know of a higher rate for any product?
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A shop in the High Street that sells goods to anyone with "no credit checks"
A Flatscreen TV costing under £700 on the web was about £1000 in the shop window, an APR of approx 30% (which is not bad for no credit check credit) BUT there was an additional Service & Support charge of £5.25 /WEEK making a total of over £2300 over 3 years.
Service & Support for a TV costing over £800 - presumably the warranty would cover at least 2 years from Phillips the manufacturer!
It is a good job they do not sell cars
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'Pay day' loan operations are often over 1000% APR.
When I used to pay by instalments I have chosen the cheapest 'per month' option which was often a higher annual premium.
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Saga, if you are "lucky" enough to be 50 or over, and Virgin both provide interest-free instalment schemes for their insurance so not everyone is a shark.
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This type of thing seems to be getting more common. Of course there have been many companies charging usurious rates of interest - the now defunct 'Yes' car credit operation being one of them. Insurance companies are amongst the worst though. I recently bought a new mobile phone and 'declined' the offer of three months free insurance and thereafter £9.99 a month premium. Sure enough, today I discovered that the mobile phone company had passed my details to the phone insurance company and they had set up a Direct Debit without my permission! I cancelled it straight away. The premium was £5.99 a month with a £4 'administration charge'. I think the whole insurance industry could use someone shining a searchlight into its darker corners.
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If it was me I would try to go without a car for a year, and save up the premium for the following year so I didn't need to pay in instalments. Once I'd got to this stage I would keep saving for each successive year.
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If you know your math, you can always calculate how much they are charging you.
We can't blame them just because national math skill has become appalling.
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This makes OP's example look dirt cheap: www.getmetopayday.co.uk/charges.aspx Only 22,694% APR. Yes, Twenty-two thousand percent.
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Only 22 694% APR. Yes Twenty-two thousand percent.
Well, at least they are "honest" about it!
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Well at least they are "honest" about it!
Because the law requires it.
Personally, I think APRs confuse things, and I'd much rather think in real money than in percentages. If you look at the example linked above, the loan is going to cost £50 - what could be clearer than that?
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