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Payday Lending
Posted on 2/16/16 at 10:06 am
Posted on 2/16/16 at 10:06 am
Maybe the wrong board for this but I was at church on Sunday and a guest speaker was there. Part of her discussion was on Payday Lending and how the business keeps those in poverty down and makes it extremely hard for them to get out of the cycle.
While listening, I thought to myself, they are providing a service and people sign documents and know what they are getting into. Without them, low income people would be completely unable to access funds from standard banks. Simple supply/demand.
After doing some research on them, it is absolutely insane how much money they charge for their products. Rates in the triple digits is standard and as high as 500% in some states. The government in many states has begun regulating them and has slowed down their growth but LA has more than 900 of these places and they are obviously targeting poor and minority neighborhoods. It is $43B industry and the more I learn, the crazier it is. Wells Fargo, BOA, JP Morgan all have a vested interest in these deals too.
What are yalls opinions on the businesses?
While listening, I thought to myself, they are providing a service and people sign documents and know what they are getting into. Without them, low income people would be completely unable to access funds from standard banks. Simple supply/demand.
After doing some research on them, it is absolutely insane how much money they charge for their products. Rates in the triple digits is standard and as high as 500% in some states. The government in many states has begun regulating them and has slowed down their growth but LA has more than 900 of these places and they are obviously targeting poor and minority neighborhoods. It is $43B industry and the more I learn, the crazier it is. Wells Fargo, BOA, JP Morgan all have a vested interest in these deals too.
What are yalls opinions on the businesses?
21
Posted on 2/16/16 at 10:13 am to stevengtiger
It's a business taking advantage of irresponsible and impatient people, and I have no problem with it.
Posted on 2/16/16 at 10:14 am to stevengtiger
quote:A fool and his money are in great demand....
What are yalls opinions on the businesses?
Posted on 2/16/16 at 10:15 am to stevengtiger
Posted on 2/16/16 at 10:17 am to stevengtiger
Usury is a sin. Sure, let the buyer beware, etc. but at a certain point, the proprietors are preying on people's ignorance. I'd rather do honest work and not rip people off.
Posted on 2/16/16 at 10:17 am to LSURussian
I think it is usury and am glad that I will find no reason to visit one in desperate need of funds. That being said the only way I would loan most of those people money is if they were paying absurd amounts of interest. There is a reason the only option available to you is a payday loan. Usually that reason is you don't pay your bills. I would be interested to see what the default rate is on these loans...
Posted on 2/16/16 at 10:19 am to Delacroix
quote:
It's a business taking advantage of irresponsible and impatient people, and I have no problem with it.
I agree with this for the most part. But if loan sharking is illegal, I don't understand how these operations can stay in business.
Posted on 2/16/16 at 10:27 am to bobaftt1212
quote:
I would be interested to see what the default rate is on these loans...
Around 40-50% per the google
Posted on 2/16/16 at 10:36 am to stevengtiger
It's fricked up, but it is justified.
You look at the target crowd and it makes sense the interest rates are that high
You look at the target crowd and it makes sense the interest rates are that high
Posted on 2/16/16 at 10:38 am to castorinho
It saddens me to see these places and cash for title places always near military bases.
Posted on 2/16/16 at 10:44 am to stevengtiger
I'm all about letting the free market work, but what these places are doing is indeed reprehensible. Once they take out one payday loan, they are pretty much stuck in a repeated cycle they can't get out of and will need more. More should be done to curb them taking advantage of the financially illiterate.
Posted on 2/16/16 at 10:45 am to VABuckeye
The Buy Here, Pay Here car lots are the GOAT of taking advantage of these people.
Posted on 2/16/16 at 10:46 am to stevengtiger
quote:
Payday Lending
quote:
What are yalls opinions on the businesses?
It absolutely keeps people in the cycle, and they are making a ton of money off of people who don't really know what they are signing up for.
I would not operate one of those for anything, but I'm sure they are cash cows.
Posted on 2/16/16 at 11:19 am to stevengtiger
One notch above Security Plan Insurance.
Posted on 2/16/16 at 11:25 am to kywildcatfanone
Even if you told them "hey, if you don't pay your $1,000 balance in 30 days, you're going to owe me $5,000.", it wouldn't stop people who can't/don't understand/appreciate the consequences.
Still messed up to take advantage of them.
Still messed up to take advantage of them.
Posted on 2/16/16 at 11:37 am to Grits N Shrimp
quote:
Still messed up to take advantage of them.
I agree and personally would have a hard time being in that kind of work. That said, ultimately they screw themselves anyway even if nobody is trying. They just can't help but throw money away. They'll spend it on something else that is completely useless, whether it is lottery tickets, booze, hookers and blow, etc. And then they will complain about how it is someone else's fault.
Posted on 2/16/16 at 11:39 am to Coach Guidry
Speaking of "Buy Here, Pay Here"... Did y'all know they sometimes out GPS trackers that can disable the vehicles and let them know the location for easy recovery" 
Posted on 2/16/16 at 11:43 am to southernelite
That's becoming more the rule and less the exception. They probably sell that '93 Cutlass 3 times a year.
Posted on 2/16/16 at 11:55 am to foshizzle
quote:Same here. I remember reading an analysis of the payday loan industry a few years ago. The average loan was under $100 and the average repayment time was less than 2 weeks.
I agree and personally would have a hard time being in that kind of work.
So if the lender charged interest rates comparable to a "legitimate" consumer loan business, the amount of the interest on a typical loan would be less than a dollar.
The interest rates charged by payday loan businesses are outrageous but when the amount of the interest is considered, charging, say $10 interest, on a $100 loan for two weeks is the only way they can make money, especially considering the amount of loans they have to charge off as uncollectable.
Posted on 2/16/16 at 12:05 pm to stevengtiger
quote:
Part of her discussion was on Payday Lending and how the business keeps those in poverty down and makes it extremely hard for them to get out of the cycle.
No one wants to take personal responsibility anymore.
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