Posted on 06/17/2016 7:48:07 AM PDT by reaganaut1
Despite Barack Obamas Hope and Change promises to fundamentally transform the U.S., there remain a great number of Americans who live paycheck to paycheck (when they have work at all). Occasionally, they find themselves in desperate need of short-term credit to avoid a financial disaster, but they dont have good credit.
One of their options is to get a short-term advance from a payday lender. In the typical transaction, a storefront lending business provides a cash advance of a few hundred dollars to the borrower, who promises to repay within one or two weeks with a fee of 15 to 20 percent.
Suppose auto mechanic Joe Smith is short $100 of being able to pay for repairs to his refrigerator. He goes to a local payday lender and gets the $100. When he gets his next check in two weeks, he repays the loan plus $15. To Joe, thats much better than having the refrigerator break down, costing him a lot of wasted food.
Someone might point out to Joe that the annualized interest rate is usurious and claim that the lender is exploiting him. Joe would probably reply that he doesnt care because its the best option he has. He might even tell the individual to go away and mind his own business.
Unfortunately, Washington, D.C. is full of bureaucrats who think that almost everything is their business, and wont go away because they have power.
(Excerpt) Read more at forbes.com ...
People respond to this emotionally.
Paying 15% on a three day loan because you need the money now is not usury (unless you are a muslim, but they often just play games to get around the “interest” side of it)
If someone lie Thomas Sowell understands the need for a payday loan, I think his viewpoint is a lot more valid than the viewpoints of people who scream about how unfair they are.
I fix the refrigerator myself.
In my experience, most payday loans go for things that an be delayed or skipped. It’s more of an instant gratification thing. People come to the church all the time wanting money to get out from under a payday loan.
My favorite reason is always “I don’t know why I did it”.
I think you’re wrong. I have on occasion used them and they saved me a lot of heartache and grief. I realize that some people lose their propert when they can’t repay the loan. But for many, they are the only place which would help.
Yes.
You are absolutely right. I have a friend who borrowed $600 on a title loan and it took 8 months before he’d paid off 39 cents worth or principle. All of the payments were interest.
But, it’s a good thing, because it cured him of ever doing that again.
The interest is compounded on top of compounded.
I used them one summer. Pledged my car. In 30 days, I paid the interest and some more. The balance rolled over. It took about 6 months, but I became free that way. I don’t think I did anything immoral and I received help I needed without bothering a family member or friend.
People who have the resources to pay it off in three days don't need a payday loan to begin with.
She needed 100 dollars, but balked when they demanded a check for 145 dollars before they would give her the 100 dollars.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
I’m pretty sure that it is illegal for anyone to write a post dated check and illegal for anyone to demand one. Since it’s a state law, I suppose it depends on the state.
If you need a short-term loan, overdraft your account, if you have an overdraft line.
You’re using the bank’s money to pay a debt but it beats a payday loan.
The one regulation in the State of Missouri that differs from other states is that there are limits on the interest rates that you pay. The total APR that you can charge in the State of Missouri is 75%, including all interest, fees, and other costs associated with the loan. This differs from many other states where there are no rules that limit the amount of interest that can be charged.Source: Missouri payday loan interest rate
No, its not. I’ve written a post-dated check and it helped me settle a debt for which I didn’t have funds on hands at the time.
Kept the check from bouncing.
The democrats want the racket to themselves. They will close them down then ride in to town with government backed and approved payday loans. When vote time comes around... Loan forgiveness.
This is BS. Payday loans cost more than the old Mafia loans.
Its legal financial rape.
Ive used payday loans.Im on fixed income and fell behind on my electric bill.Electric company gave me 2 hours to pay the bill or turn it off.This was winter,no electric=no heat.Even with a good reputation at my bank they couldnt help me that fast but the local payday lender helped me in 15 minutes.
That’s why I said banks should. They had no problem making sub-prime mortgage loans. Surely they could make small loans as low rates. The title and payday loans are just legal loansharking.
Reason for the higher rates is that the rate of default is much higher than more traditional loans. So these "payday loans" outfits are taking a much higher risk than traditional banks that are more discriminating about who they loan money to. Because the more traditional banks are more discriminating, they have less defaults and so can charge lower rates.
The real life lesson in all of this is that there are consequences for defaulting on your debts and ruining your credit.
I'm reading a biography on Harry Truman right now and he had partnered with somebody in 1919 on a men's clothing store. When the store failed, he had the option to declare bankruptcy. But instead, he worked out payment plans with his creditors and was still making those payments 20 years later, when he easily could have walked away in a bankruptcy filing. I believe he shouldered some of his partner's debt as well.
The benefit to Harry Truman was that his credit was always good and never had to borrow money on onerous terms.
What ever happened to pawn shops? You need cash, you take something of value in to pawn, get some cash, and you get a month or whatever to pay back the money, and some interest (something like 25-30%). If you don’t pay it back and retrieve your property, they sell it. No ongoing accumulation of compound interest. I did it when I was younger, and always got my property back, too.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.