The cost of borrowing

[Pages:21]The cost of borrowing

Unit 4

This is Rob

> He has a part-time job. > He receives benefits but some of

them are not being paid yet. > He is a single parent of three

under 16. > Bills keep coming and he

struggles to pay them...

Rob needs cash

> To pay for school trips. > The children need new shoes. > The boys want a video game. > Rob needs new clothes.

Rob needs cash

Rob decides to borrow ?300... Where from? > Doorstep lender > Credit union > Credit card > Bank loan > Payday loans > Catalogue Which of these will be the best for Rob?

Doorstep lender What are they?

A doorstep lender is a company which lends you money and calls at your home to collect the repayments.

Doorstep lender How do they work?

In July 2017 one doorstep lender offered a ?300 loan over 52 weeks: > 52 payments of ?10.80 per week, > 299.3% APR. > Total amount payable ?561.60.

What is APR?

Abbreviation for Annual Percentage Rate.

"The rate at which someone who borrows money is charged, calculated over a period of twelve months."

The rate includes interest and other charges such as acceptance or document fees.

Doorstep lender What really happens?


July 2017

52 payments of ?10.80 per week = ?561.60


Aug 2018


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