Payday lenders get a very hard rap and are often criticised for preying on the vulnerable and charging high rates of interest.
But what about the customers they work with?
The public opinion is that anyone using a payday loan is frowned upon or vulnerable, but this is certainly not the case.
I left University and was offered a job by one of the UK’s largest payday lenders and spent hours a day dealing with customers during the application process and the tough job of doing collections.
Most customers were nurses, supermarket workers, hospitality and kitchen staff, but what about the fraudsters, impersonators and celebrities?
Please note that names have been changed or protected for confidentiality purposes.
Sorry, not quite the infamous no.7 (who is worth around £400 million), but to my surprise, professional footballers were regular payday loan customers looking to borrow up to £500 until payday.
Not from the Premier League, but certainly Championship, League One, League Two, Conference and Scottish Premier League.
An application comes in and goes through the automated checks, then it gets sent to the underwriting team (i.e me)
First thing on my list is to confirm employment – and usually this meant getting a pay-slip or discretely calling the place of work and asking if the applicant is there.
With footballers, it was easy. You just had to check the BBC or team website and you could see if they had played last Saturday and were going to play this weekend. It was a quick check and could be funded quickly if everything stacked up.
But why players earning £5,000 or £10,000 per week needed to borrow £200 or £300 continues to elude me.
Some had horrendous debt problems and gambling problems and their default rate was surprisingly high.
The Applicant from Heaven
We got an application from John Smith, a 60-something male living in Manchester and it looks good. We call the mobile to confirm details, no answer.
We call the landline and ask to speak to John Smith and a woman answers, “Why do you need to speak to him?” We explain that he applied for a financial product this morning (it is common to mention this).
She responds “That’s impossible, he died two weeks ago.”
Long story short, we ran a check on the mobile phone number and it belonged to his son, and further checks showed that he had a very poor credit rating.
It took just two weeks before he started impersonating his father and using his better credit rating to borrow money.
Customer Jane O’Neil applies and again the application looks very good. I call the mobile number and ask a series of questions, but am trying to understand why this individual has such as deep, husky and male voice.
I gave the individual the benefit of the doubt, they could be a transsexual or mixed gender and it is not uncommon in this day and age.
A quick check of other co-inhabitants at their address and there is a young male with very bad credit history and 5 payday loans open.
Meanwhile, Jane’s credit record shows great credit and no previous payday loan applications.
The Big Spender
A young gun applied for a £500 loan and was accepted. Two months went without repayment and the customer did not respond to any collection emails or phone calls.
We took the individual’s email address from the application and popped it into Facebook – and usually their Facebook profile will come up.
It’s a good method to see if the individual has recently gone abroad, gone AWOL or currently out of work – and you would be surprised how much people share on their social media.
The result? This guy was living the high life.
The customer was posting numerous photos of eating at fancy London restaurants such as Nobu, The Ivy and checking into Mayfair hotels for drinks and more.
We never got the money back.
On a Plane, Never to Be Seen Again
An Asian customer applied for a loan and he had been living and working in the UK for the last 15 years as a web developer. Good income, solid employment, good credit score, his credentials looked good and he borrowed £400.
There was no repayment taken on his next pay date and when we called for collection, the mobile number was dead.
We called his employer and asked if the individual was there, and they replied “Oh he has gone back to his country permanently, he is not coming back.”
We investigated further, and the customer had borrowed over £5,000 worth of payday loans from multiple lenders – with no obligation or intention to pay back.
The individual could have used the money to buy a car outright or a two-bed flat in India.
The Wolf of Wall Street
We regularly had doctors, lawyers and accountants applying for loans and it is not uncommon. You can be a working professional but still struggle to make it to the end of the month due to a medical bill or funeral cost.
We had a lot of investment bankers from some of the world’s biggest banks.
These guys were earning £5,000 and £10,000 per month, but continued to borrow £300 every month – and sometimes they would go into arrears for months.
Repaying 1p Per Month
If a customer goes into arrears and has not made any form of payment for several months, they could approach or be approached by a debt management company who will take charge of their finances.
This will usually involve consolidating numerous debts across mobile phone bills, credit cards and payday loans and creating a plan to pay them off each month.
Sounds simple, right?
For us, the payday loans direct lender, like us, this often meant we would receive a cheque in the post from the debt management company on behalf of the individual.
The cheque would usually be 1p or £1 per month – in fact, the paper and stamp on the letter was usually worth more!
It was intended to be paid every month for the next 20 years, and no doubt these plans are still continuing.
I’m not saying payday lenders are always the cleanest or most ethical companies (my employer was always very transparent), but high interest rates are simply charged to reflect the risks associated with giving bad credit loans which are unsecured.
We had a number of very pleasant customers who paid on time (even if they are no guarantor loans), but every day was an uphill battle to avoid fraudulent applications and collection calls were often greeted with verbal abuse.
At one point, the company hired security guards to stand outside the office.
Hey, we’re all just trying to make it until payday, right?