Pay Day Loan Products Experiences/Advice Please

dmbminaret on 22/10/2021 - 08:41

Hey all,

Young fella is 23 and seems to have gotten into a bit of strife with pay day lenders. Maybe a valuable lesson, but is taking it's toll now and we're a little worried about the whole situation and potential mental health ramifications even though he seems to be ok.

Owes about 5k across various lenders. One in particular, Cigno had a principal amount of $200 and is now at $1200 apparently. One apparently has some security on his car.

He's been to visit a financial advisor who is working on getting some relief such as a freeze and then managed payments, but I thought I would do a bit of investigation on any other options/ideas in the mean time.

Wondering if anyone has any experiences of sorting these guys out? i.e. one option is for us to step in and pay them out. Do they entertain negotiation of a reduced payout figure ever?

Another question is people's views on taking over kid's debts? Gift? Repay? Don't do it? We don't have the cash available, but could borrow it easily.

Cheers.

Financial

Comments

  • thatonethere on 22/10/2021 - 08:56
    +14

    They are tough cookies and been around for a while so don't think you can easily bluff them with media (ACA etc).

    One option if he has decent income is to convert it to a personal loan and pay out the payday loan people.

    However, there may be some unfortunately factors as to why he is borrowing money which need to be addressed and stopped. Once you know that perhaps that will guide you as to whether you step in or not. I wouldn't bother loaning unless they have the capacity to repay it pretty quick. Just gift it on the condition that "we dont have to go through this again".

    • dmbminaret on 22/10/2021 - 09:32
      +2

      there may be some unfortunately factors as to why he is borrowing money which need to be addressed and stopped

      Yes, that's in the process also. It's not a new thing, but we thought we would wait until he was ready to ask for help and therefore having some capacity to mitigate bad financial behaviour rather than lecturing.

  • bobbified on 22/10/2021 - 09:04
    +4

    It might be worth reviewing each contract to see that all the interest rates, fees and terms are within the rules set by the regulators to make sure the amounts owed are actually correct. If there's any discrepancies, you could potentially use it as a bargaining chip.

    • dmbminaret on 22/10/2021 - 09:37

      Good call. Food for thought.

    • dmbminaret on 22/10/2021 - 09:36
      +2

      Wow that's huge, thanks.

  • try2bhelpful on 22/10/2021 - 09:29
    +2

    These places are, absolute, scum.

    https://ndh.org.au/debt-problems/payday-short-term-loans/ris…

    Unless the financial adviser can find a loophole I think the best thing is to pay out the debt and make sure the young fella gets the message he shouldn’t screw up again.

    • holdenmg on 22/10/2021 - 09:33
      +3

      Agreed.

      There should be a National Register where people can Self-Ban themselves from further Lending Approvals unless counter-signed by a Licensed Financial Counsellor.

  • Platinumtelecom on 22/10/2021 - 09:40
    +1

    If you have the cash to pay it off, then speak to these guys https://creditmediation.com.au/

    They are specialised in debt negotiations. Often they will get the debt reduced to principal only.

  • try2bhelpful on 22/10/2021 - 09:50
    +5

    I just wanted to wish you guys all the best with sorting this out. It is stressful.

    I’m not sure who I loathe more. These guys or the sports bet people.

    • blitz on 22/10/2021 - 10:01
      +6

      These guys or the sports bet people.

      Porque no los dos?

      • try2bhelpful on 22/10/2021 - 10:39

        Muy cierto

        Forgive me if I have the gender wrong.

  • coffeeinmyveins on 22/10/2021 - 10:00

    Yikes. How to ruin your credit rating in one simple step!

    Another question is people's views on taking over kid's debts? Gift? Repay? Don't do it? We don't have the cash available, but could borrow it easily.

    Honestly this might be the best option, if you're able to take out a loan at a low interest rate and then pay off all these payday loans (which I assume are operating at an interest rate of like 25-35%) that'll stem the bleeding from the growth of interest.

    Definitely make him repay it, don't gift it. If a 23 year old has gotten into this much strife with payday loans, bailing him out will just tell him that this sort of stuff has no repercussions. I'd be making him pay it off with every single paycheck he gets until it's paid off.

    https://cignoloans.com.au/how-much-does-it-cost/

    this is hilarious. So you're essentially paying them almost 50% of the initial $300 loan in fees alone? Then interest? wow.

    if this is your kid, he needs some serious financial help.

    • dmbminaret on 22/10/2021 - 10:28

      if this is your kid, he needs some serious financial help.

      Makes me realise what my parents might have been thinking 20 years ago lol

  • morse on 22/10/2021 - 10:15
    +5

    Get him to see a financial counsellor rather than an advisor, preferably through a not for profit organization (some financial services have an ulterior motive).
    Some useful info here:
    https://ndh.org.au/talk-to-a-financial-counsellor/

    I probably wouldn't clear the debt for him as he'll be likely to do it again, but perhaps help with other expenses once he's set up a plan to pay down the debt if you wish to. e.g. provide grocery vouchers.

    • dmbminaret on 22/10/2021 - 10:25
      +1

      Get him to see a financial counsellor rather than an advisor

      I think that's what it is actually. It's at a local community centre.

      • morse on 22/10/2021 - 10:31

        Oh that's good. They are pretty amazing at what they know and can do. I feel like they should run sessions in schools when kids are 15-16year old, if they don't already, so they are prepared once financially independent.

        • try2bhelpful on 22/10/2021 - 15:10

          Absolutely. Getting kids to understand finances sounds pretty critical to me. Scaring the crap out of them is not a bad strategy.

          When I was a kid we did sexual reproduction in third form. Part of the course was pictures of what tertiary syphilis does to you. Examples of the true costs of payday loans might have a, similarly, sobering effect.

  • barbarella on 22/10/2021 - 10:28
    +1

    Don't pay the debts for him, as its a vital lesson….but help him, as you are, manage the repayments himself…
    These companies that encourage people to go into debt make me really angry ggggrrrrrrr

    • try2bhelpful on 22/10/2021 - 10:35
      +2

      With the interest being charged by these vultures it is better to get him free from them. I’m sure he is going to learn the lesson anyway and it will be cheaper for everyone. The hope is they will back off once the financial advisers are involved and drop a fair bit of the interest.

      • netjock on 22/10/2021 - 10:45

        Or roll it into a low interest credit card and make sure he signed a contract, gets the bills and hands over the cash.

        • try2bhelpful on 22/10/2021 - 10:47
          +1

          The problem is when you’ve screwed yourself with the pay day lenders your credit rating is shot. You would be lucky to be able to get a decent low interest credit card.

          • netjock on 22/10/2021 - 10:49

            @try2bhelpful: Parents take out the credit card. Make sure he turns up monthly to hand over the cash.

            • try2bhelpful on 22/10/2021 - 11:21
              +1

              @netjock: This would be considered a cash advance on a credit card. A personal loan would, probably, be better. However, the low interest credit card, or a debit card, might be an option once the mess is over.

      • Hardlyworkin on 22/10/2021 - 10:47
        +2

        I agree @try2behelpful, why let these vultures feast on his carcass any further if the parents can put a stop to it. He will be paying 10k or so rather than 5k.
        If he can't roll it into a personal loan himself or with a reasonable interest rate then a 5k ma and pa loan isn't the worst. I would write up a contract or have some of his pay cheque go directly to the parents. Then just cross your fingers he has learners his lesson and get him the support he needs. He is your son, not some distance relative.

    • coffeeinmyveins on 22/10/2021 - 10:40
      +3

      Don't pay the debts for him, as its a vital lesson….but help him, as you are, manage the repayments himself…
      These companies that encourage people to go into debt make me really angry ggggrrrrrrr

      Why not? A vital lesson by paying hundreds (if not thousands) MORE to a payday loan company?

      The lesson can still be learnt, while you prevent your child from going into even more debt.

      • netjock on 22/10/2021 - 10:50

        Teach him how to get out of it.

        Budgeting and not over spending.

        Roll it into lower cost loan and pay the money off.

        Look at the crap he didn't need spent it on.

  • brad1-8tsi on 22/10/2021 - 10:57
    -1

    What are you doing to sort your son out? He is the root cause of the issue. Does he have a gambling problem? Does he have a budget? Why is he spending beyond his means?

    • dmbminaret on 22/10/2021 - 11:06
      +2

      What are you doing to sort your son out?

      Plenty now, but before someone needs help, they rarely take it.

      He is the root cause of the issue. Does he have a gambling problem? Does he have a

      Der

      Does he have a gambling problem?

      Reasons are out of the scope of the forum and nobody's business unless they're gonna pay it.

      Does he have a budget? Why is he spending beyond his means?

      He's 23. I'm guessing he's learning all that and more.

  • KaTst3R on 22/10/2021 - 11:11
    +2

    Payday lenders? You mean loan sharks…

    I went through Cigno's website. $300 bucks loan + almost $150 in fees. Wow…50% straight off the bat. This business model should be illegal.

    • coffeeinmyveins on 22/10/2021 - 11:13

      Yeah that's even before interest kicks in! Crazy!

      • KaTst3R on 22/10/2021 - 11:16
        +1

        I couldnt even find what's the annual interest rate on their website. It must be hidden so deep in the T&Cs that people only realise they are f**ked when their loan balloons to 5x by the end of the year.

        • coffeeinmyveins on 22/10/2021 - 11:18
          +2

          On their 'payload loans' page they say

          " When you make your application for a short-term’ payday’ loan, we will provide you with all the relevant information regarding our fees and any lender costs. You can also read about these in advance on our Costs page "

          and the "costs" page is just https://cignoloans.com.au/how-much-does-it-cost/

          so they don't even list the interest rate publically. Must be something really high.

          How is this legal.

          EDIT:

          Ding ding ding. https://www.slatergordon.com.au/class-actions/current-class-…

          Class action lawsuit

          • KaTst3R on 22/10/2021 - 11:21

            @coffeeinmyveins: The "costs" are probably cheap compared to the real money maker.

            It must be so high that they dont want people to find out until they are about to sign it. At least banks gives an indicative rate on the PDS then you negotiate downwards.

  • tsunamisurfer on 22/10/2021 - 11:42
    +1

    $5k is a very low amount in the scheme of things.

    What is the debtor's income and expenses? Are they 'able' to pay it back and just unwilling?

    I would not help my son out in this situation.

    a) Despite being a small amount, they need to learn how payday loans work and feel the pain requisite inconvenience of the repayments.
    b) Paying it off for them just facilitates more of the same behaviour as they know there is always a safety net.
    c) the Payday loan is not the issue, the issue is the individual's lack of financial acumen, that has to be fixed.

    Guide him on reducing expenses, making sacrifices and finding another job to pay it off.

    • dmbminaret on 22/10/2021 - 11:51
      +4

      Are they 'able' to pay it back and just unwilling?

      The payments are crippling. If he was a millionaire, he wouldn't be doing pay day loans?

      the issue is the individual's lack of financial acumen, that has to be fixed

      Absolutely true but not fixed, learnt. Was never there to be fixed. This can be the learning.

      I would not help my son out in this situation

      Good for you. Hate to be your son. Help comes in many ways, not just financial.

      • try2bhelpful on 22/10/2021 - 12:10
        +4

        Completely agree. Tough love is bullshit when it makes the matter worse. I’m pretty sure the kid understands he was stupid.

      • tsunamisurfer on 22/10/2021 - 12:41

        The payments are crippling. If he was a millionaire, he wouldn't be doing pay day loans?

        What are the repayments on a $5000 loan? Again that amount is small, easily covered by even a minimum wage job.

        Good for you. Hate to be your son. Help comes in many ways, not just financial.

        To be clear I would not bail him out by paying off the loan.

        Giving him advice and support, yes, per the statement below.

        Guide him on reducing expenses, making sacrifices and finding another job to pay it off.

        • dmbminaret on 22/10/2021 - 12:46

          What are the repayments on a $5000 loan? Again that amount is small, easily covered by even a minimum wage job.

          I'm not aware exactly, but I do think you're comparing to a conventional loan.

          • tsunamisurfer on 22/10/2021 - 12:54

            @dmbminaret:

            I'm not aware exactly, but I do think you're comparing to a conventional loan.

            No I am aware of what pay day loans are.

            A minimum wage job should be able to handle a $5k loan with high interest rates and a short repayment period.

            • coffeeinmyveins on 22/10/2021 - 13:17
              +2

              @tsunamisurfer: Being your child would be horrible.

              The interest on this loan could mean this kid is paying off thousands more.

              Why wouldn't you help your child out?

              Sure they need to learn a lesson , but letting them wallow in the debt, (profanity) them for the next few years and the mental anguish is not what parents are supposed to do.

              • tsunamisurfer on 22/10/2021 - 13:32
                +1

                @coffeeinmyveins:

                Being your child would be horrible.

                Why wouldn't you help your child out?

                I specifically said to provide guidance in my very first post.

                You don't bail them out because it enables them to do more of the same in the future. Paying it off for them will more often that not (of the examples I have seen personally) set the precedent that there will always be a safety net for them.

                That is more dangerous than paying the debt.

                • try2bhelpful on 22/10/2021 - 13:46
                  +3

                  @tsunamisurfer: You don’t know this kid; he may well have just done something stupid that has, just, escalated due to exorbitant interest rates. He could’ve been too embarrassed to go to his parents before it got beyond him. You are assuming he will do “more of the same”. Me, in this case, I would give the kid the benefit of the doubt and make it, very, clear that there will be no next time. Let the kid pay back the loan at an interest rate the parents can obtain. Get the kid counselling so he doesn’t make the mistake again.

                  Providing kids with a safety net is what parents do. It doesn’t mean there aren’t limits to this but why exacerbate this situation. The current interest rates are stratospheric.

                  • tsunamisurfer on 22/10/2021 - 14:17
                    -1

                    @try2bhelpful:

                    You don’t know this kid

                    I don't need to know him to know him.

                    Anyone accessing multiple pay day loans falls into 'a category'.

                    You are assuming he will do “more of the same”. Me, in this case, I would give the kid the benefit of the doubt and make it, very, clear that there will be no next time.

                    Don't you think every well meaning parent before you has also said 'this is a once off, never again'???

                    I have seen this 'talk', the debtor will also swear till they're blue in the face that this 'won't happen again'.

                    On the balance of probabilities, they do not have the self control required of an adult blessed with the legal ability to sign contracts.

                    Providing kids with a safety net is what parents do.

                    Absolutely, again we are dealing with someone lacking the wherewithal to handle / understand the situation. Wiping away the debt, from an ominous external entity removes the consequences.

                • coffeeinmyveins on 22/10/2021 - 14:03
                  +3

                  @tsunamisurfer:

                  You don't bail them out because it enables them to do more of the same in the future.

                  "sorry you went bankrupt son. Sure I could have helped you, but what would that teach you? Now get out of my way, I have a dinner to go to"

                  This is some messed up logic dude.

                  I'm not saying "bail them out". You recognize that they've (profanity) up, but leaving them in that situation will make it worse for them. If the debt is $5000 then pay it off, and they pay you off with every single dollar they earn until it's paid off.

                  Alternatively leave them having to pay $10,000 over the next two years and cripple their life.

                  • tsunamisurfer on 22/10/2021 - 14:20
                    +1

                    @coffeeinmyveins:

                    "sorry you went bankrupt son. Sure I could have helped you, but what would that teach you? Now get out of my way, I have a dinner to go to"

                    Actually this would be a very good outcome for the debtor.

                    Their credit file would be ruined for years, wiping their ability to get credit again and have to rely on their own income.

                    You are conflating allowing a tough lesson to be learned with someone rubbing their hands with glee at the suffering of their own child.

                  • try2bhelpful on 22/10/2021 - 14:29

                    @coffeeinmyveins: That is, absolutely, the point. You know your son, none of the rest of us do. We aren’t talking about an abstract concept here it is another human being in trouble. Right now I think you have your answer and know what to do.

                    You did ask other people’s opinions and you’ve got them. Pick and choose what suits your family and the circumstances. Getting him financial planning assistance, to get to the root cause, is critical.

                    I wish you all the best with this issue; it must be horrific. The most important thing is to sort this shit out and make sure it doesn’t happen again. Treat whatever the underlying cause as to why he got himself into the mess. Any assistance should be dependant on he knows, clearly, you won’t be bailing him out again.

                    Best of luck.

        • try2bhelpful on 22/10/2021 - 12:48
          +1

          Actually the best thing to do is get the kid off the exorbitant interest rates of the pay day loans ASAP. He can do all the “sacrificing” thing whilst the debt has a low interest rate. At this point it is, unlikely, he will have the credit rating for a low interest loan. Hence the need for the intervention of the parent.

          I think the parent understands what needs to be done and is getting the best advice.

    • 2esc on 23/10/2021 - 09:02
      +1

      In the scheme of things 5k is a lot to some people. These pay day operators exist because even $200 is a lot of money to some people. I've heard of people doing these loans just for grocery money some of these people have issues of their own creation but sometimes their situation is not self inflicted.

  • watwatwat on 22/10/2021 - 12:44
    -1

    financial advisor who is working on getting some relief

    Sounds like a lot of effort for $5k.

    had a principal amount of $200 and is now at $1200

    No one should ever take out a loan for such a tiny amount of money. This person needs some serious financial education. Go watch 5 hours of personal finance videos on youtube.

  • tsunamisurfer on 22/10/2021 - 12:45
    -5

    There is nothing wrong with Pay Day loans.

    It is a required niche in the financial market.

    Everyone that signs onto one of these financial products fully understands the terms and obligations.

    I don't care how much the fees are in comparison to the principal.

    I don't care how much the interest rate is.

    I don't care how much the debtor has left in their bank account after the repayments?

    I just care that the debtor signed on the dotted line and did so of their own free will.

    • dmbminaret on 22/10/2021 - 12:50

      That's fair. And to be fair, I'm not looking for ways to circumvent the agreements but ways to finalise the agreements in the best way for the debtor.

      • tsunamisurfer on 22/10/2021 - 14:25
        -1

        And to be fair, I'm not looking for ways to circumvent the agreements but ways to finalise the agreements in the best way for the debtor.

        That is fine.

        There are a raft of options available to the debtor, most of which have been outlined above.

        Those options would mostly suit loan amounts in the 6 or even 5 figures.

        This is $5k.

    • jorf on 22/10/2021 - 12:52
      +8

      "Look at me in my ivory tower".

      There is plenty wrong with payday loans.

      They exist solely to prey on the vulnerable and uneducated.

      • tsunamisurfer on 22/10/2021 - 14:28
        -6

        They exist solely to prey on the vulnerable and uneducated.

        They exist because there is a niche in the market.

        If we starting controlling what the 'vulnerable' and 'uneducated' could and could not be exposed to it would be a long list including, buying non essential goods, driving, and even ability to have children.

        • try2bhelpful on 22/10/2021 - 14:46

          Actually we do control what the vulnerable can do. There are, certainly, people in society who have a conservator to make decisions for them. In fact the three situations you mentioned can, indeed, be covered under conservatorship rules. There are, also, rules around how contracts are structured in many situations to ensure they are clear and precise to avoid exploitation.

          There are plenty of “niche markets” we don’t cater to. Society can be a tad arbitrary on what is acceptable and what isn’t. It will be interesting to find out what the financial adviser uncovers. These guys have form.

        • jorf on 22/10/2021 - 15:17
          +1

          They created the niche to take advantage of the unfortunate.

          If we starting controlling what the 'vulnerable' and 'uneducated' could and could not be exposed to it would be a long list including, buying non essential goods, driving, and even ability to have children.

          Whataboutism.

          There's a fundamental difference between affording your life (and doing so with managed loans that are affordable to your earnings if required) vs. borrowing tiny amounts with wild interest rates and charges that you never had the ability to pay back without constantly overdrawing your income.

          Just because some people are unable to control their finances doesn't mean that they should be taken advantage of.

        • Cheapskate Paul on 22/10/2021 - 23:18
          +1

          "If we starting controlling what the 'vulnerable' and 'uneducated' could and could not be exposed to it would be a long list including, buying non essential goods, driving, and even ability to have children."

          I assume that you would be in favour of the decriminalisation of the possession and use of all recreational drugs, and possibly even their supply. If so, good on you for your consistency.

    • try2bhelpful on 22/10/2021 - 12:52
      +6

      The problem is not everyone has the capability to understand what these loans mean and the way they are advertised is unscrupulous. There is a niche market for small loans but these guys aren’t it.

      • tsunamisurfer on 22/10/2021 - 14:37
        +1

        The problem is not everyone has the capability to understand what these loans mean

        If they sign on the line that says I understand the terms and conditions of this contract, what is a business to do? He is an adult.

        and the way they are advertised is unscrupulous.

        How so?

        Coca Cola, advertise their drink as tasty, fun, attracts other fun people at parties, should they also spend the last 5 seconds of their 30 advert slot outlining what the amount of sugar does to one's physiology?

        ANZ advertise their financial products as ones which are easy to apply for, easy to understand and help their customers achieve their dream of home ownership.
        Should their marketing campaign depict customers who are crying at the kitchen table at the end of a Pandemic repayment holiday?

        • try2bhelpful on 22/10/2021 - 14:57
          +1

          Actually every customer should, clearly, understand what happens with the costs associated with a loan.

          ANZ takes a lot more care vetting their customers to ensure they can service the loan and are a lot more interested in working with people to ensure the interest rates don’t stack up.

          Businesses can conduct themselves in an ethical manner; these guys don’t. The regulators are, continually, trying to ensure people aren’t being exploited but they keep changing tactics to find another way to do this.

          I put these guys on the same level as drug dealers. They have a product people want but it is not healthy to the customer or society. Like people addicted to drugs you give the victims help and support to get off the stuff.

          • tsunamisurfer on 22/10/2021 - 16:45
            -1

            @try2bhelpful:

            I put these guys on the same level as drug dealers. They have a product people want but it is not healthy to the customer or society. Like people addicted to drugs you give the victims help and support to get off the stuff.

            Now we're down a slippery slope where we can also ban :

            • Smoking
            • Drinking
            • Gambling
            • Soft Drinks
            • Confectionary
            • Cakes
            • Hungry Jacks / KFC / Maccas / Chicken Treat
            • Potato Crisps
            • Crypto
            • Dangerous sports.
            • try2bhelpful on 22/10/2021 - 17:00

              @tsunamisurfer: And, in all those cases, people are much better off if they don’t partake in them.

              I would have no trouble banning smoking. In fact if they tried to introduce it today it would be.

              Got to admit I wouldn’t be too upset if a number of those on your list disappeared off the face of the planet; especially the ones that cause as much damage as the payday loans do.

              • tsunamisurfer on 22/10/2021 - 17:05
                -2

                @try2bhelpful: I would like to live on a planet that allows its citizens their own freedoms to choose what is right or otherwise for their needs, using the above as the list.

                Where does personal responsibility kick in?

                To be clear, I do not mean the freedoms to not pay tax, or kill someone I don't like or take what I want from JB hifi.

                Pay day loans do not cause damage.

                Damage is caused when clientele 'of a certain calibre' misuse them.

                • try2bhelpful on 22/10/2021 - 17:32

                  @tsunamisurfer: Yeah, we will need to disagree on that.

                  The concept of these loans may be OK but the implementers “of a certain calibre” misuse them.

                  Society regulates quite a bit of what we do. Places like Aldi are, often, recalling devices that are faulty and dangerous. We have guards on chain saws, we have casings on motors, we have flammable standards on some clothing, etc. I see the need to regulate the payday loans in the same bucket.

                  • tsunamisurfer on 22/10/2021 - 17:35
                    -1

                    @try2bhelpful:

                    recalling devices that are faulty and dangerous. We have guards on chain saws,

                    Addressing Personal / Physical safety.

                    we have casings on motors,

                    Addressing Personal / Physical safety.

                    we have flammable standards on some clothing, etc.

                    Addressing Personal / Physical safety.

                    I see the need to regulate the payday loans in the same bucket.
                    I don't see a threat to safety.

                    • try2bhelpful on 22/10/2021 - 17:59
                      +1

                      @tsunamisurfer: Ensuring financial safety is, also, an important consideration. The Government regulates financial services as well as physical products.

                      This is from an extract of a Government report, with a section on payday lenders, made in 2019.

                      https://www.aph.gov.au/Parliamentary_Business/Committees/Sen…

                      Interesting reading and something the OP might want to look at to get some insight into his son’s situation.

                • Cheapskate Paul on 22/10/2021 - 23:24

                  @tsunamisurfer: There are many high functioning heroin & cocain users. Damage is caused when clientele 'of a certain calibre' misuse them. These drugs are still banned.

                  • try2bhelpful on 22/10/2021 - 23:51
                    +1

                    @Cheapskate Paul: Quite correct

                    Up until 1916 you could buy cocaine from Harrods.
                    Sir Arthur Conan Doyle had Sherlock Holmes injecting a 7% solution of cocaine.
                    Cocaine was used in throat lozenges, gargles, wines, sherries and ports.

                    It is about proper usage and determining when it becomes abusing. Regulation is about protecting people from being exploited and damaging themselves and society. Drug addictions should be treated as a medical condition not a way to exploit people. Ensuring people are not exploited by unscrupulous money lenders is similar.

                    There is nothing wrong with drugs used in an appropriate way, there is nothing wrong with money lending when done responsibility; it is exploitation and abuse that is the issue.

                    • Cheapskate Paul on 23/10/2021 - 00:18
                      +1

                      @try2bhelpful: Exactly, and pay-day lending is exploitation. Yet recreational drugs are outlawed and pay-day lenders are not.

    • terrys on 23/10/2021 - 08:29
      +1

      "Everyone that signs onto one of these financial products fully understands the terms and obligations."

      Of all the egregiously baseless statements and unfounded assertions you have contributed, this is the most ridiculous demonstration of the wilfully ignorant position you are pontificating from.

    • try2bhelpful on 22/10/2021 - 12:53
      +1

      Thanks for that info.

  • TheBird on 22/10/2021 - 13:02
    +2

    Owes about 5k across various lenders. One in particular, Cigno(cignoloans.com.au) had a principal amount of $200 and is now at $1200 apparently. One apparently has some security on his car.

    Usually it takes time to get to this point. $200 to $1200? It's either a debt that's been acruing for most of his life (unlikely) or your them ignoring their obligations and collecting fees/fines.

    Do they entertain negotiation of a reduced payout figure ever?

    It's not my area of knowledge, but from what I understand, some will, some won't. It'll depend on age of the debt and how they view the likelyhood of getting full payment. If it's an active debt, it's unlikely. If it's gone to an external debt collection agency or the debt has been sold to another agency at a discount, then maybe.

    Another question is people's views on taking over kid's debts? Gift? Repay? Don't do it? We don't have the cash available, but could borrow it easily.

    This really depends on the person and your goals. I did a few years working with unemployed and I've advised some people who have been in circumstances like this. Sometimes it's just circumstances that got out of their control. Sometimes, it's them and the neverending string of poor decision making. Most of the time it's the latter and then you're probably better off letting them go bankrupt so they can't do damage to themselves and their loved ones anymore. Virtually every time I've seen a pattern: Others move heaven and earth to bail them out and as soon as you turn your head, they've dug themselves a bunch of bigger holes.

    Worst case you'll need to consider: You bail them out and they learn the lesson that they can be shortsighted and reckless and they'll get bailed out encouraging them to do it again in the future. For most people, I think you'll need a fair bit of pain so they learn from their problem but not so much they feel it's easier to give in combined with hope so they can get back to living their life in a positive way.

    • dmbminaret on 22/10/2021 - 13:19

      Yea, that's pretty much my thoughts. I've had a bit to do with addicts, and bottom line is if they haven't hit rock bottom and desperately want help, no matter how much help family wants to give…it won't work.

      He's a good lad, I think just got over his head with a few bad (but not too serious) behaviours and they've caught up big time. I feel for him cause I was shitful with money at that age too.

  • try2bhelpful on 22/10/2021 - 13:36
    +2

    Sometimes I think it was easier back when I was a lass. There was no bankcard, no Facebook, and it was hard to get loans. You could get in trouble with lay-bys but it just meant you didn’t get the goods. We’ve, all, made poor decisions, but, if we are lucky, we have the means to bail ourselves out without everyone knowing.

    Letting someone drown in debt isn’t clever but getting them professional help to deal with the root cause is. You clean up the mess and ensure they don’t get into another one. Pushing the kid to do something desperate, because you won’t help them, is not a great idea. Also, remember they will be the ones picking out your old person’s home.

    • dmbminaret on 22/10/2021 - 13:57

      they will be the ones picking out your old person’s home.

      Haha not if he's in the gutter

      • try2bhelpful on 22/10/2021 - 14:04

        That is my point. You want to keep them out of the gutter and clean themselves up.

        We don’t have any kids but I keep in well with the nephews and nieces because they will, probably, be instrumental in what happens to me when I get old. One of my nephews is a doctor so I’m hoping he will ensure my medical conditions aren’t neglected. You hear such horror stories.

    • tsunamisurfer on 22/10/2021 - 14:49

      Agreed.

      There was a time I had to put on a shirt and tie, make an appointment with the bank manager and convince him why he should give me a loan.

      • try2bhelpful on 22/10/2021 - 15:01

        To OP. Best of luck. The kid is lucky to have you for a parent. I hope he appreciates you. Make sure you chat with the financial advisor to see what they say too. Hopefully they can get a fair bit of the interest kiboshed.

  • madreece on 22/10/2021 - 15:34
    +2

    Good luck mate.
    These companies are the true scum of the finance world and that's saying something, the good thing is he isn't in too deep.
    The interest rates will be the maximum they are allowed to charge, it's the "fees" that are horrendous.
    This is how the scum get around the maximum allowable interest rate.
    Screwing people who can't afford it, I hope there is a special place in Hell for these bottom dwellers.

  • JIMB0 on 22/10/2021 - 21:20

    Why not default on the debt? Isn't the damage to your credit file only for 7 years?

    • dmbminaret on 23/10/2021 - 06:10

      I think 7 years after debt is finalised in whatever form. Bankruptcy better in that regard depending on individuals circumstances.

      • El-Rhi on 23/10/2021 - 06:48
        +1

        It’s 5 years from the default listing date and if this happens he won’t be able to obtain credit during this period (or will find it very, very difficult) even if he ends up paying everything off after.

        • JIMB0 on 23/10/2021 - 09:36

          So he wouldn't be able to get more loans and also saves $5k. By the time the 5 years is up he would have learnt to live without these loans.

  • deme on 22/10/2021 - 21:43

    These are top notch people: https://consumeraction.org.au/

    For those that want to help: https://action.choice.com.au/page/69531/petition/1

  • Cheapskate Paul on 22/10/2021 - 23:41
    +1

    I think the worst advice in this thread is to tell your son that this is the last time that you will help him. This just makes it likely that he will not come to you next time he gets into trouble, if there is a next time.

    • dmbminaret on 23/10/2021 - 06:09

      Wow that's such a profound perspective.

  • SlavOz on 23/10/2021 - 09:44

    Not sure if it's been asked, but why did he originally take out the pay day loan?

    Either way, unless you really want to see him rack up debt and become burdened, I would bail him out under strict expectations that he gets a job and pays it back. At 23, he still has a small chance of turning his life and decision making around if you set him straight.

  • Schuy1 on 23/10/2021 - 12:42
    +1

    OK, as a caring parent, this is what I suggest:

    How many payday lenders are there?

    Let’s assume 5.

    Firstly, best if you get your son to appoint YOU to be authorised to act on his behalf - do this with each of the 5 lenders.

    Next, speak to each lender’s credit arrears management department.

    This is basically what the credit repair businesses do (and charge for) but a savvy person can also DIY.

    You use bankruptcy as a bargaining chip.

    It’s called “making a repayment arrangement” or more commonly called a “Part 9 debt arrangement”

    If your son declares bankruptcy, they get NOTHING back, no money at all and write the debt off in full - they loose big time.

    This is what they’ll accept:

    The debt becomes “non-accrual” ( NO INTEREST charged) with the principal only required to be repaid.

    You arrange an AFFORDABLE regular repayment (usually on your son’s payday) … let’s say, $20 a fortnight (through an automatic periodical debit through your son’s bank account.

    A $1,000 principal debt in the above example thus will be repaid in less than 2 years with no further interest being paid by your son.

    If the debt is $5,000 the repayments are only $100 a fortnight should be “doable” - he might even take on a 2nd part time job just to concentrate on the arrangement.

    Advantages:

    • Your son repays his own debt
    • He learns a valuable financial lesson
    • No need for any debt consolidation loan which he won’t get economically anyway because regular lenders “run” from payday loans in arrears
    • You also get satisfaction re helping your son!

    IMPORTANT: Once an agreed regular repayment is negotiated STICK TO IT !!

    The credit department will likely issue a formal arrangement agreement to sign by your son.

    Always offer an achievable repayment figure that the lad can afford.

    You need to be firm with the negotiations with the credit control manager …. It’s a bit like a poker game - you need to not show your hand and play hard-ball.

    Remember, your “ace” is if they don’t accept an arrangement your son will declare himself bankrupt and they get ZERO return on their loan.

    In my 45 years of finance experience (now retired) I have never seen a credit management department not accepting an arrangement.

    Good luck.

    JB

    PS: In regards to you paying out the debt in full, the same applies - you negotiate for what’s called “a full and final settlement” …. they will discount the debt by say 20 to 50 or even more percent if they get a full cash repayment of principal owing!

  • rektrading on 23/10/2021 - 13:17

    A friend gambled away $10000s (the real amount is unknown) for many years. Their family kept paying the debt until they got sick of it. They then borrowed money from loan sharks and defaulted. They agreed to pay it off by being a mule. Got busted and spent a few years in maximum security. Came out and spent years hiding from collectors. The family ended up selling assets to pay off some of the debt.

    Another friend borrowed $100000s for business endeavours from their rich in-laws that turned out to be virtual poker. Got busted, kicked out of the house, divorced, lost custody and disappeared for 5 years. They came back fat with missing front teeth.

    Another friend (husband and wife) buidl a successful business but was also a slave to gambling. They owned a few houses. The person that was responsible for paying the bills spent the money on other things. They defaulted and the houses were literally sold right from under them. They're now starting from scratch.

    The point here is weak people will never change. Pay off their debt once and they'll expect the same in the future.

    Don't be the person to pay off someone else's debt.

    • try2bhelpful on 23/10/2021 - 13:22

      I don’t think you can extrapolate your examples to clearing a $5,000 debt with Payday lenders. Especially if clearing the debt comes with financial planning advice.

      However I, seriously, think you need a better bunch of friends.

      • SlavOz on 23/10/2021 - 15:14

        However I, seriously, think you need a better bunch of friends.

        Haha I was thinking the exact same thing. Even if they're not friends, I'm amazed at how many deadbeats someone can know in one lifetime. These people are toxic and destructive, you really shouldn't have them in your life in any capacity.

        However he has a point. A $5k debt from different lenders unable to pay off at 23 years of age…sounds like OP's son is just massively lazy and entitled. Unless he has serious medical issues, his son should be working or studying full-time and have some basic control of his finances. It's not 1 mistake, he took out multiple loans and is now leaving his parents to pick up the pieces.

        • try2bhelpful on 23/10/2021 - 23:53

          Some people just make some bad decisions. Doesn’t mean they can’t clean their act up. Unfortunately these things can snowball.

  • OzHunterNSW on 24/10/2021 - 10:39
    -3

    A bit of a problem!… you are joking… 5k in debt, over a number of platforms.
    It's not a lesson, for he will never learn, and you know it. He never learnt from one platform, and did the same upon another, and another.
    How is his sKoolin?

    He better own up, sell all he has, and start again - this "5k" will compound out of control…

    How is your sKoolin? How could you sit back and have allowed this to occur?

    Sell everything, and pay everyone back - immediately - not "on when I get around to it"… do in NOW.

    • dmbminaret on 24/10/2021 - 11:59

      How is your sKoolin?

      Wat?

      How could you sit back and have allowed this to occur?

      He doesn't live at home.

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