Exactly
August 26, 2010 | international | Comments (1)As the payday lending debate heats up in Britain, the “moneyblog” at a Left-wing newspaper, The Guardian, says this:
This week’s YouGov omnibus survey for Compass appeared to find overwhelming public support for a cap on interest rates as a solution: 68% of respondents believe there should be a lending rate cap to cover all forms of consumer credit, including the unsecured credit sector.
I can see how this seems like a sensible way of helping prevent people who are seeking short-term credit for small loans from being exploited, particularly those seeking loans from home credit and payday lenders. After all, some payday lenders from America charge over 2500% APR. However, these sky-high APRs exaggerate the true cost of this type of credit.
Interest rates reflect more than the cost of money. Last year’s report by the Joseph Rowntree Foundation into the feasibility of a not-for-profit home credit business found that, even on a not-for-profit basis, to make the service financially sustainable the percentage cost of home credit would be over 100%.
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What?! Reporters in Britain actually research the topics that they report?! Even if it forces them to deal with a little math?!!
Ridiculous! It’s so much easier to simply regurgitate a popular opinion, mixed with harsh negative attacks and a little fear.