Newham students protest against posters for pay day loans
PUBLISHED: 17:51 03 February 2017 | UPDATED: 07:58 07 February 2017
Teenage protestors joined a demonstration against posters advertising a pay day loan company that charges interest rates of up to 1,258 per cent.
Teenage protestors joined a demonstration against posters advertising a pay day loan company.
The young people, from the London Design and Engineering University Technical College, stood united with staff and students from the University of East London at Cyprus DLR station to call on Transport for London to remove advertisements for loans company Smart-Pig.com.
Speaking in front of one the posters, which offer loans of up to £350 to students from the age of 18 upwards, 14-year-old student Jasmine Leake, who can not take out a loan, said: “Paying them off can leave you scrounging for more money than if you never took them out.
“It’s going to cause you to completely stress out and even, maybe, drop out which defeats the purpose of the loan in the first place.”
Joined by about 20 people, Jasmine, who studies a course in the built environment, explained the protestors wanted TfL to take down the posters so they could no longer tempt youngsters to get into debt.
“We need to give students more options,” the Upminster student said.
Although the technical college students are not eligible for loans, they have been considering their next steps and expressed concerns for students already studying at UEL.
Debbie Lindsay, manager of the university’s money advice service, explained how on average students can experience a shortfall of £250 a month and those who lack support from parents, savings and hardship funds can be drawn towards payday loans companies.
She said: “These payday loans are extremely harmful to our students. They appear to be a financial helping hand, however, they plunge students into crippling and spiralling levels of unmanageable debt due to the extortionate rates of interest.”
UEL imposed a ban on pay day loans companies advertising on its campus and claim they have asked TfL to remove them, but the posters, on platforms either side of the station’s tracks, have remained.
Senior lecturer Dr Tim Hall said: “This is a polite request to TfL to take the posters down and respect us as an institution.”
A spokeswoman from Smart-Pig.com said: “Smart-Pig was started by two students, one of whom who had experienced serious debt problems with a payday lender at university, in order to give students a better deal.
Commenting on a statement on the poster stating annual interest charges of 1257.84 per cent, she added: “Our loans can never cost anywhere close to 1190% - this is a quirk of the APR calculation, which was not designed for loans shorter than a year. A Smart-Pig loan normally costs a few tens of pounds, and even if a customer defaults on our loans, they can never cost more than 50% of the amount borrowed.
“The APR % of a loan is massively determined by the duration of the loan. As Smart-Pig only offers short term loans our APR % is disproportionate to what we charge.
The company also stated by law it has to advertise its annual percentage rate on all its promotional material, but felt this misled customers into thinking it charges “excessive amounts” for its loans. “The most a customer will ever have to repay in any situation is 50% of what they originally borrowed. This means a customer who borrows £100 will only ever owe £150,” the spokeswoman said.
She added: “Smart-Pig was designed to be a short term solution for students needing a little extra cash to pay for such things as travel, food or unexpected costs that may arise before their next student loan payment arrives.
“We are here to help in the event that the student can not borrow this money from elsewhere or finds it more expensive to borrow from another source.”
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