Jbest testimonial for payday loan company smart pig is from someone with no last name, who declares in all caps: “I love you Smart-Pig.com! You are my favorite pig of all time! Who needs Peppa when you’re in my life!”
“nour“clearly only encountered pigs willing to give him a representative loan APR of 782%, which is 1% less than Smart Pig’s offer.
Smart Pig is just one of many high interest payday lenders now offering their services to students. Their advertisements, which were reported to the Advertising Standards Agency (ASA), showcase the prizes you can get your hands on, including the chance to “win rent for a term.” All in a space they could have used to explain their APR.
A disturbing number of undergraduate students are turning to payday loans. About 2% of undergraduate students used them last year, according to a National Union of Students (NUS) survey. That might not seem like a lot, until you consider it means up to 46,000 students risk the debt spiral associated with payday loans.
Despite a NUS campaign in 2013 to ban payday loan advertisements on campusespayday lenders still heavily target students.
Peachy Loans have recently had complaints held against them by the ASA for an advertisement, they spread sandwich wrappers in cafes across from university and college campuses. The campaign, it was found, encouraged a casual attitude towards taking out a loan. Its slogan was: “Small bites put a smile on your face! Now you can get a loan of £50 to £500 and pay it back in small pieces…” from a cartoon mouth.
People willing to take financial advice from their sandwich wrappers may seem like a financially unstable group unlikely to return your investment, but unfortunately, it’s probably the same group of well-meaning but naive people who will incur the cost of delay.
There’s a reason payday loan companies use such mundane campaigns, and it’s the same reason email scams are so poorly written. You and I can realize that the emails are obviously a scam, but that’s because we’re supposed to.
Scammers deliberately use terrible spelling and implausible stories because it eliminates “false positives”, according to Microsoft Research. These are people who will likely figure out this is a scam before they send their money.
In the same way, payday loan ads weed out people they don’t care about, until they’re left with incredibly desperate people or young, unreasonably optimistic people.
There’s money to be made from people optimistic enough to think the APR won’t apply to them, as implied by Wonga’s now-banned ad that claimed their 5,853% APR was “irrelevant.” “.
Payday loan companies are not looking to attract people who might research what their interest rate actually means. They are looking for more vulnerable people.
People looking at smiling pigs in top hats carrying money bags and not seeing a monumental danger sign. People who pay attention to Austrian singers handing over wads of cash in TV commercials, not the alarming text at the bottom of the screen.
Or they’re looking for people far too desperate to care. Too often, students fall into the latter category.
Other options are available
Student Money Saver’s advice is to approach your university or student union for financial assistance. No matter how desperate things seem, advice and financial help will be available.
Hardship Fund are made available to you by your university when you are in a difficult financial situation. Hardship funds are lump sums or payments given to you when you cannot afford essentials, such as paying rent, utility bills, or food.
These are usually lump sums or installments paid to you, which you will not have to repay. In some cases, your university will give you money as a loan, but without the massive interest rates offered by payday lenders. Talk to your university and they will help you.
You can also request a higher bank overdraft if you haven’t done so already. Banks know that students are likely to have high incomes when they graduate, and so are likely to allow you this extension as an investment in your loyalty. If a bank won’t offer you an extended overdraft, look for a bank that will.
James Felton is the Content Editor for the Student Funding Website student money saver.