Mutual Loans Card Through The Door - Sounds Dodgy

[Thunderchild]

I have now received 2 leaflets through the door advertising a "mutual loan"

Figures don't add up to me, a loan over 51 weeks of £500 will cost £200. I thought that percentage calculation would look like: (200/500)x100 = 40% and it's under a year as 51 weeks rather than 52 so 52/51 = 1.096078x40% = 40.784%.

So where did 104% come from and even 40% is huge and it looks like they are trying to imply 4% (you pay back 104% of what you borrowed).

Another worrying thing is that I have now had 2 of these with a sticker on them quoting my local agent with just a first name and mobile phone number.

The reply address on the card that folds in half into a pre stamped return item is a local one and the company is "Mutual clothing & supply co ltd"

Is it me or this this dodgy as hell. Aparently mutual clothing and supply co limited is authorised and regulated by the financial conduct authority. Are the agents ?

[factor-fiction]

Well i did it very roughly in my head before, but doing it with more accuracy now I get it to a little over 80% APR

[B00]

I'm mildly curious why this is bothering you so much Thunderchild?

Are you interested in taking out a loan with these or indeed any company? If not, surely the simpler option would be to chuck the flyers in the bin and stop your head from hurting for nowt?

[Buenchico]

The APR calculator you've used assumes that you repay the whole loan at the end of the loan period. However the Mutual loan is gradually repaid over a period of time, so the capital gradually reduces. That's why the formula in my link above has to be used (because your simplistic method doesn't take that into account).

[Hopkirk]

I supect if you don't keep up your payments the man they send round will get bigger week by week, as a well as the amount you owe.

[gingejbee]

I'm with BOO...why are you so concerned about it?