Satsuma Loans offer short term relatively low-value loans to cover emergency situations which could be anything from a large appliance breaking down to a pet needing urgent medical treatment.
Satsuma is a new company, but is part of the Provident Financial Group who have been lending money to low-income (or sub-prime) clients since 1880. Satsuma is an online-only operation and has been in business since 2013, but has the experience and industry knowledge of its formidable parent behind it.
The Fine Print
Satsuma is a high-interest lender, and makes this clear: the APR (annual percentage rate – or the percentage of the loan that will need to be repaid) is stated clearly on the website, in large letters and is repeated in several ways: as a percentage, as a currency amount (for example, on a 6-month loan of £600 you could repay £189.60 for a total repayment of £1,137.60, which represents £600 of loan, and £567.60 of interest.
There are no hidden fees: a customer accepting this loan will only have to pay a maximum of the amount stated. Customers can repay early, and this may result in a lower payment being accepted – however, customers must phone the helpline, state their intention to repay early and ask for a settlement amount, otherwise the amount repayable remains according to the contract, even when early repayment is made.
However, this can work in the customer’s favour: because the total amount repayable is stated before the loan contract is signed, Satsuma will not (in fact, legally cannot) charge the customer any more interest on the loan.
There are no penalty charges either – but in the event that a customer has taken longer than the agreed period to pay off a loan, Satsuma is quite unlikely to offer that person their services in the future unless there are clear extenuating circumstances and the customer has been honest and upfront with Satsuma about their issues.
What Are the Interest Levels?
Satsuma Loans run anywhere from 991% to 1575%, which is very high indeed. This is because Satsuma Loans are unsecured (meaning that the company does not have any guarantee of getting their money back, as they would if a wealthy friend acted as guarantor, or if you used your car, house or jewellery as surety that you will make repayments in good time) and stand a high chance of being written off.
Therefore, those customers who stand the test of time, taking out more loans, and repaying them in good time, will be trusted with slightly lower rates – and it is these customers paying the high rates of interest who cover for those defaulting one-time customers.
Such high interest rates would be illegal if they pushed the amount of interest repaid higher than the amount of the initial loan (if, in the example above, the customer borrowing £600 had to pay more than £600 in interest and/ or charges).
Satsuma avoids this by putting short timeframes on the loans of between 13 weeks and one year. This can mean that weekly or monthly payments are quite high: but for someone with an urgent need for cash now, this can be a better solution than a payday loan company (see below) or an illegal loan-shark.
Penalties or Fines for Non-Payment
If Satsuma customers get into difficulties and cannot repay the full amount in the promised time frame, there is little that Satsuma can do.
If a customer takes 20 weeks to pay off a 13-week loan, it is unlikely that any action will be taken, and only the smallest impact on the customer’s credit score will be felt – and that will vanish within 6 months of the whole loan being repaid.
Of course, Satsuma may not offer that customer another loan should they need one, but in general, as long as some payments are made, the account will be left open to be repaid more or less at leisure.
However, leaving the loan completely unpaid, refusing to take Satsuma’s calls or respond to texts or emails can alert them to the fact that the loan is going delinquent. After a certain amount of time, Satsuma will write off the loan and sell it to a debt recovery company – and that debt recovery company can add interest, can charge penalty fees and sometimes can threaten non-payers with legal letters, law-suits, and, occasionally, seizure of assets.
Satsuma has no control over this, so if a customer gets into financial trouble, they are infinitely better off paying something to Satsuma to ensure they stay on the books, paying down their loan over time…
Overall, Satsuma Loans is not a bad company. They charge high interest, yes, but all the charges and fees are included in that amount, which will not change as long as the loan remains active on Satsuma’s books.
Some customers are frustrated by the high APR, others may be unaware about the need to ask for the settlement figure when paying it off early: but all this information is readily available on the website.
Best advice would be to consider all your options, choosing the companies that offer the longest repayment times, repayment amounts that are affordable for the duration of the loan, and borrowing the lowest sum that you need to meet your urgent expense: and then pay it off as quickly as you can!
Anywhere from £100 to £1000 as a first time customer. Good, longstanding customers may be offered higher amounts and more favourable interest rates, but this will depend on personal circumstances and the ability to repay.
The maximum you will pay back on a Satsuma loan will be £1992: this is if you are allowed to take the maximum amount of loan, which is £1000, and take it over a year – a rate of 991%. It is probable that this APR is a little lower than the maximum because pushing it higher would make the loan illegal under UK financial regulations.
Yes, you can opt for monthly payments, or weekly ones, depending on which time period best suits your needs.
No, Satsuma are somewhere between payday lenders and mainstream financial institutions. With payday lenders, the interest rate is even higher, and the repayment terms even shorter, between a week or two and three months, usually.
Mainstream financial institutions (banks, in short) offer the best interest rates, but often have stringent criteria before they will offer loans, and most of them need to be guaranteed or secured in some way.