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BusinessIdeas
- Original Poster
- #46
You think it was a good comment? It was a question not a comment and also:
1. It was totally off topic
2. It was a stupid question, from someone who should have known the answer. He wont be doing my profit and loss next year.
When I said that mercy stood,
within the borders of the wood,
I meant the lenient beast with claws,
and bloody swift dispatching jaws
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Tobes
- Original Poster
- #47
The majority of credit cards do not charge anything near 177% but that's rather not the point. Some people for whatever reason cannot obtain mainstream credit (which is fine, it is not a human right), but they still want to have nice things at certain times, and are willing to pay for them over the medium to long-term.
If they are perfectly aware of what kind of agreement they are entering into, and everything is legal, above board and open, what's the problem?
The sheer magnitude of the interest rate? It's my understanding that only relatively small amounts of money are lent, up to about £500.00, so even though the interest rate is high, it's not, in the end, going to be a huge amount of money to be paid back. These schemes are over a finite number of weeks, unlike credit cards, where it is perfectly possible to pay so much more in fees and interest payments over years and years; simple calculations show that if you merely pay the minimum payment off each month it can take decades to pay off the full amount.
So, what exactly is the problem, I really don't see why there is such objection?
If they are perfectly aware of what kind of agreement they are entering into, and everything is legal, above board and open, what's the problem?
The sheer magnitude of the interest rate? It's my understanding that only relatively small amounts of money are lent, up to about £500.00, so even though the interest rate is high, it's not, in the end, going to be a huge amount of money to be paid back. These schemes are over a finite number of weeks, unlike credit cards, where it is perfectly possible to pay so much more in fees and interest payments over years and years; simple calculations show that if you merely pay the minimum payment off each month it can take decades to pay off the full amount.
So, what exactly is the problem, I really don't see why there is such objection?
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Read the other crewgirl thread on how to sell and you may see why the "problems", its advised that that you say to customers things to "create confusion". If you were "confused" do you think you would be perfectly aware of what kind of agreement you were entering into ?
In my line of work in the past i have had to gain entry to properties with a warrant from the courts a power company representative and gas or electric fitter due to unpaid bills to change the meter to a card meter so no more debt can be ran up.
At present if i wanted i could be doing over 20 properties a day 5 days a week every week because debt levels are so high.This sort of loan selling doesnt help.
When huge amounts of people cant pay basic bills like fuel bills you know something is wrong, also levels of crime are way up on last year with an unbelievable amount of break ins at present most likely due to rising debt.
This affects us all regardless of what we think about it as crime spreads as the people in debt get desperate.
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BusinessIdeas
- Original Poster
- #50
Firstly Lockie. It is you that is creating confusion by trying to relate two totally different issues. Lockie is referring to my treatise on cold selling, wherein I suggest that it is quite effective to get over the initial introduction in a cold selling situation, by calling a first aid box a "home safety kit" to give the potential customer the opportunity to ask questions, thus allowing you to outline the features and benefits of your product. There is no intention to lie, or to make a sale by deception.
As for the loan business, we are a highly regulated industry as everyone knows, all loan issues now have to be preceded by a pre-contract form which outlines all interest and additional charges that may be levied to the customer in a totally transparent manner, and we are directed by the Office of Fair Trading to take a responsible attitude to lending, and to make customers aware of all remedies available should they fall into debt. Furthermore, unlike the banks and credit card companies, we dont charge extra for late or missed payments and there are no heavy handed or bullying tactics to harrass people into paying.
As for APR, this is recognised as not being representative of the actual amount of interest levied on credit over periods of less than one year. To give an example of this:
A £10 loan which is paid back the next week with £1 added for interest would make the APR over 14000%.
This is a good example which shows the inadequacy of APR to adequately represent values, when applied to credit, which is repaid over less than a twelve-month period.
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BusinessIdeas
- Original Poster
- #52
Blatant lie? I dont think so. You can name your product whatever you like and indeed, one of the leaders in the supply of first aid kits also call their kits "home safety kits"
http://www.amazon.co.uk/Bambino-Complete-First-Home-Safety/dp/B000MF67AA
The idea is just as previously stated: its not to make a sale through lies its just a device to give you a chance to show your potential customer the kit and to describe the benefits. I am not advocating that you hard sell to your customer, it takes very little time for them to realise that its a fist aid kit, seconds really, so your not wasting either his/her time or your own. It just gives you a chance to let the customer see you as a person.
Refrigerated Lorries = Chilled Logistics
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I've seen the franchises in this kind of thing before, such as http://www.starglowceilings.com/cosmic-ceilings-pro.htm, though my personal opinion is that the trend for this in the main has been and gone a few years ago and I'm not really convinced of it's appeal. Also however professional a job this may be and how cheap the repayments I think the interest value in these kind of products are fairly shortlived and the novelty wears off far quicker than the paint does, so whilst I'm not suggesting that the glow in the dark stickers etc such as these are comparable http://www.theglowcompany.co.uk, it's still probably preferable for most parents, also if they really wanted to go in for the painting side of things then there is no reason they couldn't as easily do that using the kits from these people http://www.starglowceilings.com/ anyway.
I don't think I really get the overall tie in? Do I want to take out a loan (if someone cold called me selling that I wouldn't really be interested anyway I guess) but if I don't want a loan would I instead like stars painted on my ceiling and then a loan to pay it off? The mixture of the 2 does seem strange, and like others it has aspects that make me a little uncomfortable. I think it would be less of an issue if it was sold without cold calling as I do think that can pressurise people into buying things they don't need and can ill afford, whereas online & high street retail is personal choice foremost.
I don't think I really get the overall tie in? Do I want to take out a loan (if someone cold called me selling that I wouldn't really be interested anyway I guess) but if I don't want a loan would I instead like stars painted on my ceiling and then a loan to pay it off? The mixture of the 2 does seem strange, and like others it has aspects that make me a little uncomfortable. I think it would be less of an issue if it was sold without cold calling as I do think that can pressurise people into buying things they don't need and can ill afford, whereas online & high street retail is personal choice foremost.
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Quote:
Originally Posted by miketombs
It is off topic but 177% - isn't that illegal? If not, it should be.
Crewgirl questioned:
Shouldn't a real accountatnt know what APR is and what is legal and what isn't?
I do know what APR is. I frankly find it quite disgusting that anyone would charge 177% to anyone, but then I've never been big on exploitation in any shape or form.
Regarding its legality, I have never bothered to check it out because it's never been an issue with the clients I deal with.
The example you quoted of repaying a £10 loan a week later for £11 is a nice way to obscure the reality of businesses charging huge interest to people who are least able to afford it.
Staying off topic but referring to your ethical approach to selling, you state "The aim of your first verbal contact with the potential customer should be to create a small amount of confusion by using words that he/she doesn't understand"
You noted that I wouldn't be doing your 'profit and loss'. You got that right - I'm a bit fussy about which clients I deal with.
Originally Posted by miketombs
It is off topic but 177% - isn't that illegal? If not, it should be.
Crewgirl questioned:
Shouldn't a real accountatnt know what APR is and what is legal and what isn't?
I do know what APR is. I frankly find it quite disgusting that anyone would charge 177% to anyone, but then I've never been big on exploitation in any shape or form.
Regarding its legality, I have never bothered to check it out because it's never been an issue with the clients I deal with.
The example you quoted of repaying a £10 loan a week later for £11 is a nice way to obscure the reality of businesses charging huge interest to people who are least able to afford it.
Staying off topic but referring to your ethical approach to selling, you state "The aim of your first verbal contact with the potential customer should be to create a small amount of confusion by using words that he/she doesn't understand"
You noted that I wouldn't be doing your 'profit and loss'. You got that right - I'm a bit fussy about which clients I deal with.
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Tobes
- Original Poster
- #56
Quote:
Originally Posted by miketombs
It is off topic but 177% - isn't that illegal? If not, it should be.
Crewgirl questioned:
Shouldn't a real accountatnt know what APR is and what is legal and what isn't?
I do know what APR is. I frankly find it quite disgusting that anyone would charge 177% to anyone, but then I've never been big on exploitation in any shape or form.
Regarding its legality, I have never bothered to check it out because it's never been an issue with the clients I deal with.
The example you quoted of repaying a £10 loan a week later for £11 is a nice way to obscure the reality of businesses charging huge interest to people who are least able to afford it.
Staying off topic but referring to your ethical approach to selling, you state "The aim of your first verbal contact with the potential customer should be to create a small amount of confusion by using words that he/she doesnt understand"
You noted that I wouldn't be doing your 'profit and loss'. You got that right - I'm a bit fussy about which clients I deal with.
I'm not trying to get all annoying but you still haven't really said why 177% in this instance is so wrong?
Going to the Provident website an example is £300.00 over 55 weeks paying in total £495.00, at 177%. Now, I agree such a rate would be unacceptable for a credit card with a limit of £10k or a loan of similar amount, but when it is fixed like this, dealing with a 'small' amount I think it is a viable service. It is stated that they decide if you are suitable on whether you can afford the repayments with you current salary and commitments, so presumably they are doing what some mortgage lenders are just starting to do, after the credit industry has for a while now inappropriately given out credit.
As to the numerical example above, it is not at all unusual that someone can have that amount on their credit card, pay off the minimum amount each month, incur some late payment charges and therefore pay MORE than the £495.00 in the end.
It's my opinion that you're not taking the context into consideration. Nobody is being forced to take out this kind of credit but when they do it is regulated and made open and proper (I am assuming; it is a plc and this is what they say on their website
). No other credit is available to them, so otherwise they would not be able to do things other people take for granted, rightly or wrongly, and it is not going to be a lifetime burden, merely a year.
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Dawg
- Original Poster
- #57
As per the above, and further to a question you left unanswered further up the thread, on what grounds illegal?
The market reflects risk, and the greater the risk the greater the premium. This premium is in that 177%. If you legislate against it you deny some people any access whatever to credit.
Furthermore setting prices by central command has a sad, sorry track record of failure, the latest example being the empty shops in Zimbabwe. I can see where you are coming from, but think where it leads to is unfortunate.
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To quote the 'business lady:
"My existing business relies on aquiring new loan customers, who are a fairly good risk. The best way to test this is to open a new customer account with a low cost - high perceived value - product, that can be sold on credit door to door. This reduces the cost of asessing a customers ability/willingness to pay regularly if and when you decide extend them a loan. The glow in the dark stars on ceilings business is one that I feel would appeal to the type of customers that are interested in small loans, ie. those with young families and limited budgets."
Loosely translated, and given the 'lie to get sales' advice in her other thread, I interpret this as meaning "Take people who are short of cash, lie to make them buy something on credit that they don't need, and if they pay that back OK then trick them into taking out a loan at a huge interest rate".
The whole point of the 'glow in the dark' stuff is explicitly stated as being to lure people into taking out loans. It's the whole business model that I find distasteful, but of course that's just my opinion.
That's the context I am seeing.
"My existing business relies on aquiring new loan customers, who are a fairly good risk. The best way to test this is to open a new customer account with a low cost - high perceived value - product, that can be sold on credit door to door. This reduces the cost of asessing a customers ability/willingness to pay regularly if and when you decide extend them a loan. The glow in the dark stars on ceilings business is one that I feel would appeal to the type of customers that are interested in small loans, ie. those with young families and limited budgets."
Loosely translated, and given the 'lie to get sales' advice in her other thread, I interpret this as meaning "Take people who are short of cash, lie to make them buy something on credit that they don't need, and if they pay that back OK then trick them into taking out a loan at a huge interest rate".
The whole point of the 'glow in the dark' stuff is explicitly stated as being to lure people into taking out loans. It's the whole business model that I find distasteful, but of course that's just my opinion.
That's the context I am seeing.
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Hi Dawg,
I understand that people with poor credit history represent a higher risk and their debt is priced accordingly. 177% strikes me as disgraceful in any event, but somewhere in this thread she said that her victims, sorry I meant customers, were good risks anyway. Given that, the 'entrapment' model is not in my opinion very palatable.
I understand that people with poor credit history represent a higher risk and their debt is priced accordingly. 177% strikes me as disgraceful in any event, but somewhere in this thread she said that her victims, sorry I meant customers, were good risks anyway. Given that, the 'entrapment' model is not in my opinion very palatable.
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And that of course would be for a reason that the high street lenders won't touch them ... and yet you state that lenders and others are guilty of the same thing, ie lending money to those who cannot afford it, therefore Toby by your own admission, this practise should not go ahead!
Which is your argument here??
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BusinessIdeas
- Original Poster
- #63
Thank you for your considered view on this. It is very enlightening to hear what other people think about this business. Oh by the way I never advocate high pressure selling. Cold calling doesnt necessarily mean hard sell. There will be an offer to the customer of viewing a demo in the form of a poster, which they can accept or decline. The easy payment offer would only be made if the customer expresses an interest, but cant really afford to pay cash up front. There would be no interest added for this service. I have seen and tried the kits that you can buy to make your own star mural, but to be honest it is not as easy as people might think to create the advanced effects that make it truly stunning to see. I have personally created murals in some of my rooms and they are great for relaxing and a joy to see if I wake in the night. I havent tired of them yet.
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Tobes
- Original Poster
- #64
No, you're conflating
I have not said that high street lenders are right or wrong to refuse the people who can now only get 'doorstop credit' or whatever it's called, merely that they do.
I've also said that it is my understanding that these people are only lent to if they can prove that they can afford the repayments. Mainstream creditors are more concerned about credit history, or at least they have been up until recently.
So, someone has a poor credit rating, and so cannot get mainstream credit, yet they can 'afford' to make certain repayments. Doorstop credit errr steps in. If they cannot afford the repayments then they shouldn't get credit from anybody. Well, maybe their mum
What is the difference between giving someone a massive or sustained loan with a good credit rating that they will ultimately not be able to repay, and giving a different type of loan to someone with a shitty rating that they will be able to pay?
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Mainstream lenders do something called a risk assessment and dependent on that they lend or not, and I am not talking mainstream banks here, I am talking mainstream lenders, most of which many are not aware of.
Toby its not the credit rating that is taken into account its the credit history, ie default a couple of times within a 6 year cycle and historically they will do it again, therefore that amounts to a bad risk, therefore no dosh!!
Toby its not the credit rating that is taken into account its the credit history, ie default a couple of times within a 6 year cycle and historically they will do it again, therefore that amounts to a bad risk, therefore no dosh!!
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Tobes
- Original Poster
- #66
I mention credit history above But all the checks and histories are calculated into a credit rating, specific to their (the lender's) criteria, and that gives the yes or no.
I'm not saying that lenders do not do any kind of risk assessment, patently they do, but I'm saying up until recently it has been more about historical risk, whether someone is likely to be deliquent, rather than ability to actually pay. This has been widely reported, is a factor in the whole debt-riddled Britain ('easy credit'), and is only now starting to change, with mortgages as an example: now there is a rating whereby they will take into consideration how much you can actually afford to pay each month. The people with the best rating are child-less married couples.
I'm also not saying that these people seeking doorstep credit are being persecuted and punished unfairly; clearly they are a risk and the interest rates reflect this.
But all the checks and histories are calculated into a credit rating, specific to their (the lender's) criteria, and that gives the yes or no.I'm not saying that lenders do not do any kind of risk assessment, patently they do, but I'm saying up until recently it has been more about historical risk, whether someone is likely to be deliquent, rather than ability to actually pay. This has been widely reported, is a factor in the whole debt-riddled Britain ('easy credit'), and is only now starting to change, with mortgages as an example: now there is a rating whereby they will take into consideration how much you can actually afford to pay each month. The people with the best rating are child-less married couples.
I'm also not saying that these people seeking doorstep credit are being persecuted and punished unfairly; clearly they are a risk and the interest rates reflect this.
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No wrong Toby ... credit rating and credit history are treated as two separate matters by the lenders and after all I should know, dealing with them as I have done for a number of years. You can have a good credit rating but poor credit history, which will mean that you cannot take out from external sources more credit with a bad credit history, but you can increase limits with a good credit score/rating with existing lenders, even with a bad history.
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Tobes
- Original Poster
- #68
I'm not sure what part of my post leads you to believe that I am treating credit history and credit rating as anything other than two separate matters?
Either way, I am using the term credit rating to mean the calculation that is made to determine the decision as to whether to lend credit. Credit history I define as account performance data.
Either way, I am using the term credit rating to mean the calculation that is made to determine the decision as to whether to lend credit. Credit history I define as account performance data.
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Congratulations! I hope they were for cash rather than credit at 177%!
Out of interest, on those you sold at £150 on credit, how much do you actually make yourself after you include the interest payments (whihc I assume you also earn from)?
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BusinessIdeas
- Original Poster
- #76
No you are correct, It was going to be a partnership, but I decided to go it alone. Looking forward to installing the murals now, bit scary, but I love a challenge (up to a point)
I will hand the collections over to someone else and probably the actual painting after a while. I will just do the selling myself eventually. I prefer to do it all to start with to iron out any wrinkles in the procedure.
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BusinessIdeas
- Original Poster
- #78
I have been researching this and practicing techniques myself for months and I realised that I had learned virtually all that I needed to know to start up the business on my own, and I discoverd the final breakthrough part of the jigsaw in a eureka moment only last week. It isnt too difficult once you know how. I am in the process of putting together a training manual so I cant really go into detail.
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Hows this for persistent?
ONLY JOKING Duane!
Was wondering where everyone went, only stepped out for a coffee.
(Additional pointless characters to get over the minimum limit for posting a short message)
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