I explained to him about 0% credit cards and how, since he'd never defaulted on a loan, he would be certain to get one.
He used his new card to clear his existing debts and has been paying off the balance over the past 12 months (he has 18 months and could move to another 0% easily enough, if need be).
He really didn't believe a bank would give him so much free credit since nobody had ever told him so.
The good news is that he has now filed a complaint against the original lender and is likely to be refunded most of the interest paid over the years plus statutory interest of 8% p/a while he waits. It's going to be around £9,000
Why? Because he was unemployed all that time and they shouldn't have been lending to him.
I've re-read that sentence several times now and each time it makes more sense. I'm not sure how it could be deployed in practice, but the notion that before you do this there's some level of attainable, reasonable education you have to absorb first would be useful.
A 10 minute lesson before signing up for a loan that explains exactly how it works in a simplified format might make up for the systemic lack of financial education throughout formalised schooling. Might. Would certainly be interesting to see it happen/interested in helping it happen.
> Yeah, they know the loan is bad. They probably don’t have any other options.
I think it’s a pretty poor assumption to assume all the people taking out these loans understand exactly what they’re getting into, and what other options they may have. I think there should be a mandatory 20 minute education session for anyone taking out a payday loan/installment loan.