Posted on 06/17/2016 7:48:07 AM PDT by reaganaut1
Despite Barack Obama’s 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 don’t 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, that’s 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 doesn’t care because it’s 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 won’t go away because they have power.
(Excerpt) Read more at forbes.com ...
Just the political establishment trying to create a nation of slaves.
No, Obama is behind it. He's cutting out the middlemen and making the federal government the source for poor people already poor because of his policies.
What Jesus was saying for him to do was equivalent of putting the money in a CD at a bank. Not to go borrow money he didn’t have because he was already in over his head.
Well, what you point out shows why people need to be educated about consumer finance. People who are educated will make better decisions about their money, borrowing money, etc.
Having said that, I don’t know that I would want to ban payday loan places. I don’t know enough about the industry or how they operate. But, interest rates of 300% and more seem excessive.
Has anyone here ever taken a payday loan? Ever dealt with these places, and can fill us in? Do they really try to steer you to a car title loan at a high interest rate?
I know not everyone has a line of credit, or a credit card. But for those who do, even getting a cash advance on a credit card for an emergency expense, is a far lower rate of interest than you pay at a payday loan place.
Just as I've never seen someone exaggerate so blatantly about the interest rates. No state in the country allows "several thosand percent interest rates".
The business man said the servant should have allowed the money to be loaned out so the increase would have been in the form of usery or interest on the loan, NOT to borrow money.
No they aren’t. They’re a trap. Maybe if they did reasonable fees, but they don’t. Their entire business model is to get you into the cycle, they don’t want you to be able to afford to pay off the loan, so you instead have to pay the rollover fee, week, after week, after week.
At least Vito is honest about being a loan shark, and part of the vig is principle. Payday loan places don’t count ANY of the fee against the original loan, you can be paying them forever.
Of course not. New York has a long history of claiming to protect us from ourselves. In other words, meddling.
Some lifeline - it helps those who make bad financial decisions to keep making them while getting deeper into debt.
NY state is insane. The only thing stopping me from getting land in northern NY is the insane gun laws and the vicious tax rates. I don’t know how the hell anyone survives up there.
I've been down on my luck before and have a little sympathy for people who need cash fast. I've also dealt with idiot banks who wouldn't make loans even when you could prove you don't need the loan.
One recently complained that I didn't show enough income on my paycheck even though we are nearing retirement and I'm socking away over 40% of my take-home pay into a tax deferred 401(K).
I think the main problem with payday loan places is that the government didn't get enough of the action. They could open their own chain of payday loan places and automatically deduct the payment from the next government check. But we know what would happen if they did. Their top brass would be earning mid six figure salaries and gold plated pensions and, even if they charged the same usurious rates of interest, it would be just a matter of time before they were broke and calling for a bailout.
Banks won’t touch these borrowers...so what’s a poor man to do?
most of their customers would never qualify for any bank loan. These are high risk borrowers with high default rates. They are making a profit but their losses are very high.
I suspect nearly all payday loan establishments began as money laundering houses for drug cartels. In Reno, most are staffed with Mexicans. Before these businesses began, they had to get appropriate laws passed in state legislatures in order to charge the extreme usury rates, meaning a lot of politicians were paid a lot of money under the table to get it done. The result became a flood of bankruptcies because once the poor utilize these businesses as a rope of last result, they find themselves hung by it.
Make all the snide remarks you want about how they should know better, once-upo-a-time in this country, usury would get a person tarred and feathered or shunned from their church and community. It is a very bad thing in the Bible to take advantage of the poor.
A big part of the problem is the financial ignorance of most people. This stuff used to be taught in school and reinforced at home. Not anymore.
Another racket is the “Rent to Own” places where if you add up all the payments, you end up buying a $ 500 washing machine for $1100.
I have mixed feelings on payday lenders. They are a lifeline for some folks who have a short-term need for an emergency but the folks taking these loans are not known for their financial prowess.
Also as someone who leans toward libertarian ans state’s rights, I think the Feds should stay out of it.
The CFPB is a terrible government agency. They are “self funding” meaning they use extortion to get lenders to settle on fines for perceived violations to fund their salaries. It is amazing how many “violations” they find to keep themselves in business.
My Daughter did and was dumb enough to try to cover it with a title loan on the car that I bought her. I stepped in when I found out what was going on and paid off the loan which had escalated to more than the car was worth. A $50.00 loan cost $3,500.00 to retrieve the title, 4 weeks after the 1st loan.
Maybe you just haven't looked into it? Before Canada cracked down on them the rate could be over 3000% when calculated annually. It may still be in some provinces.
In the U.S. you have states like Missouri where APRs of 2000% percent aren't uncommon.
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