re: Thoughts on Peer-to-Peer Lending?

Plus they take a hefty cut off the top and call it a processing fee. You get to finance that also, of course. It's been awhile since I looked but that fee was well over 10% of the loan principal.

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Pay day loans typically end up at a much higher APR than 133%.

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Yeah they do. I seriously do not know of a more scumbag operation than the payday lender. They should be outlawed and the owners beaten to death in front of their children.

I will say this, there is a very lucrative sub-prime lending industry in the country that serves an important purpose for millions of people (excluding pay day lenders and pawn shops). There are a lot of people that can't get debt through traditional means and peer-to-peer lending is a good alternative. If you structure your portfolio well and understand what you're getting into, you could be successful through peer-to-peer lending. But you need to understand that you WILL have delinquencies in your portfolio, and you most definitely will have charge-offs. It's a cost of doing business in the sub-prime space.

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Yeah they do. I seriously do not know of a more scumbag operation than the payday lender. They should be outlawed and the owners beaten to death in front of their children.

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This might be an unpopular stance, but I really don't have a problem with payday lenders. I think they serve a purpose. If I'm about to be evicted and borrowing $300 and paying back $350 is going to keep me in my apt then it's a win for me, especially if its my only alternative.

I guess one could make the argument that in total they do more harm than good, but who knows? I guess I would be OK with restrictions on "rolling over" the loan (which seems to be how people get in trouble), but I wouldn't be in favor of getting rid of them.

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I guess one could make the argument that in total they do more harm than good, but who knows? I guess I would be OK with restrictions on "rolling over" the loan (which seems to be how people get in trouble), but I wouldn't be in favor of getting rid of them.

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Let’s dig deeper into the numbers to out how bad these frickers are: According to the Consumer Federation of America, a consumer watchdog group, a typical payday loan company charges you $17.50 for each $100 you borrow. At first glance, that doesn’t seem egregious – after all, that equates to an interest rate of 17.5% which is lower than some credit cards.

But here’s the catch: the term is usually only two weeks. That means if you don’t pay the money back in 15 days, you get charged another 17.5%. Then, if you still haven’t paid off the loan after 30 days, you’ll be charged – you guessed it – another 17.5%.


That's an Annual interest rate of almost 500%. The mafia isn't even that bad.

-Fifty-eight percent of payday loan borrowers have trouble meeting monthly expenses at least half the time. These borrowers are dealing with persistent cash shortfalls rather than temporary emergencies.

-Only 14 percent of borrowers say they can afford to repay an average payday loan out of their monthly budgets.


It's a predatory industry, The payday loan companies circle the poor like vultures, because they know that the poor are the only ones desperate enough to agree to such terms.

I'm all for free enterprise, but I'm not ok with industries who take advantage of the poor under the guise of "helping them".

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But here’s the catch: the term is usually only two weeks. That means if you don’t pay the money back in 15 days, you get charged another 17.5%. Then, if you still haven’t paid off the loan after 30 days, you’ll be charged – you guessed it – another 17.5%.

That's an Annual interest rate of almost 500%. The mafia isn't even that bad.

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That is definitely pretty fricking terrible and I definitely don't think that people should get themselves into those kinds of situations. Caps on the rollovers or maybe limiting the amount of interest/fees that can accrue would help.

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Fifty-eight percent of payday loan borrowers have trouble meeting monthly expenses at least half the time. These borrowers are dealing with persistent cash shortfalls rather than temporary emergencies.

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If that's accurate, then payday loans are definitely not for them. Maybe another regulatory solution would be to make the lenders have the borrow fill out a questionnaire that contains questions designed to determine if this person will be harmed by the loan.

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It's a predatory industry, The payday loan companies circle the poor like vultures, because they know that the poor are the only ones desperate enough to agree to such terms.

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Now this I do have a problem with. I've seen evidence that they are pretty aggressive with the way they market to poor people, but it is a subprime product so I'm admittedly conflicted here.

I think some regulation is in order, but I think that education would be more effective than getting rid of them all together.

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I guess my opinion is based on my thinking that you can only do so much to protect people from themselves. I think payday lenders should be a lot more transparent (I believe some post payment scenarios on walls, maybe this should be a requirement) but ultimately nothing happens that the borrow doesn't agree to.

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I've never been in one of those places, so I don't know what they are required to have in plain sight for customers to see (if anything). Many states have tackled the pay day lenders in different ways from outright banning them to other types of restrictions. One of the reasons people keep going back though is that it's a quick, easy way to get cash for these people. There are some who "graduate" up to more traditional debt products with other sub-prime lenders at much more reasonable rates.