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re: Just took on a client who took out pay day loans
Posted on 2/5/18 at 2:03 pm to HailHailtoMichigan!
Posted on 2/5/18 at 2:03 pm to HailHailtoMichigan!
quote:
I wouldn't go that far, but using APR to characterize payday loans is just totally absurd.
I don’t know. Credit card interest rates are described using APR as well, and people use them all the time for covering bills until the next paycheck (whether it’s responsible or not).
It seems to me that most people in these types of situations would use a credit card for the same purpose if it were an option, so I think the APR comparison is meaningful.
0
Posted on 2/5/18 at 2:09 pm to Brazos
quote:
Pay day loans are a sleazy business but very profitable. I guess if one had no conscience it would be a very good business to get in.
Most of these payday, class C, lenders are owned by the banks (Security Finance owned by Security National Bank type thing). I used to see some of the rural bank branches have an adjoining payday loan office include an inside door between them so the customers would not even have to go outside to get their payday loans when the consumer loan from the bank was denied. Oklahoma made them brick/sheetrock over those as it was too obvious some of the places were denying lower interest consumer loans to prop up their payday business intentionally.
Charging the maximum ANNUAL rate on a 60 day note, then rolling that note every 31st day when debtor has become in arrears 2x (biweekly or bimonthly pmts), even w/out the fees is extreme. Collect that 36% today, again in 31 days, again in another 31 days...
Oh, precomputed loans, those use the "rule of 78's" to collect all the interest 1st for a Class B lender. Class B being the type that is capped to $10k over 6 years unless using a mortgage on real estate. Precomputed loans are outlawed in many states as technically there's no penalty for early payoff but yet all the interest is collected in the 1st 10 months of the loan even if it's a 3-4-5-6 year note.
Class B Lenders are the ones furniture and appliance stores use for "X days same as cash" promos. The store gets 95% of the sales price from a lender who buys the 30,60, or 90 day paper from the store and holds about 3% back for bad paper. Easier credit qualifications than a bank loan, fast and easy for retailer, supplies a client list for the loan company to solicit for additional loans. Class B will make the 18%-30% loans to people a bank turns down for minor blips.
Posted on 2/5/18 at 2:23 pm to KiwiHead
quote:
decided to just pay it off myself
You're a good dude, OP
Posted on 2/5/18 at 2:30 pm to KiwiHead
If I was broke with no credit, I guess I would try it...but I damn sure would pay them back that much.....credit was fricked anyway, so why would he care to pay them back
Posted on 2/5/18 at 2:40 pm to Brummy
quote:
People like to point to the APR on these loans because of the obvious shock factor, but the overall profit margins for the payday loan industry are comparable to conventional banks. The high level of bad debt write-offs due to lending to high risk customers coupled with the relatively higher origination costs of such small loans offsets the higher interest rates/fees charged.
And the flip-side of the coin finally appears. These are the things that most people don't consider. They don't just charge the high fees on these small-dollar loans because they can, they charge them so they can recoup losses on the incredibly high charge-off rates they will undoubtedly have. I'm not saying it's "right" or "wrong," those are personal opinions...but most people take the bait from new articles (i.e. 1,000% APR) and don't stop to think about anything else. And, yes, there are many people who take out these loans and fall into a cycle of debt that is difficult to get out of. But, these companies also provide a service to many people that utilize them more in-line with the original intent and are completely satisfied.
quote:
If I was broke with no credit, I guess I would try it...but I damn sure would pay them back that much.....credit was fricked anyway, so why would he care to pay them back
This is the exact sort of thing I'm talking about.
This post was edited on 2/5/18 at 2:43 pm
Posted on 2/5/18 at 2:42 pm to CQQ
The lobbying power behind predatory lending is huge in Washington and state capitals.
Posted on 2/5/18 at 2:54 pm to theCrusher
quote:
watch episode 2 of Dirty Money on netflix.
Just did
Posted on 2/5/18 at 4:12 pm to KiwiHead
I looked at opening one up 6-7 years ago. Knew someone in the business and he was making shite loads of money. At the end of the day I decided it was better for me to be able to sleep at night with a clear conscience. I think being a coke dealer is a little more reputable profession than pay day loans.
Posted on 2/5/18 at 5:16 pm to KiwiHead
They are made men. nough said...
Posted on 2/5/18 at 5:19 pm to KiwiHead
There's a docuseries on Netflix about one of the crooks who started this crap, he got 15 years.
The monthly payments are to re do the loan and the balance never goes down.
Nuts
The monthly payments are to re do the loan and the balance never goes down.
Nuts
Posted on 2/5/18 at 5:39 pm to yellowfin
quote:these laws prevent these idiots from further worsening the economy by taking money they cant afford to ever pay back.
ETA: and I disagree with having laws just to protect stupid people from themselves
Posted on 2/5/18 at 5:48 pm to Ryan3232
The level of greed is astounding. I know the guy who started AdvanceAmerica and he was already a frigging billionaire before he started it. He needs to feast on the dumb poor population like a fat man needs Golden Corral. He is a Sociopath. He cannot help himself.
Posted on 2/5/18 at 6:32 pm to KiwiHead
They are legalalizec loan sharks preying on poor people
Posted on 2/5/18 at 8:35 pm to Gulf Coast Tiger
I think it was DBF that was talking about cashing people's paychecks for like $20 and how much he made off of that at his gas stations. It got into a huge argument, but it was extremely interesting.
I didn't realize that there's a sizeable portion of the population that is so poor and has such bad credit along with absolutely no money sense, that they can't open a basic bank account. They don't have the credit nor min balance to open one and keep it open, a lot of that is because when they do actually have one they overdraw constantly.
Apparently when you have some kind of combo of bad credit and overdraws and other bad banking behavior banks keep track of it.
Therefore, they literally have no where to cash checks but those places that charge like $20 to cash a $300 check.
Point being, who the hell sees those stores and thinks they look legit? I don't think anyone knows they are using them wisely, people go there knowing it's dumb but it's their only or last resort.
Should it really be illegal to eliminate someone's last resort? Doing so would be great for some, but it would be terrible for some too.
I didn't realize that there's a sizeable portion of the population that is so poor and has such bad credit along with absolutely no money sense, that they can't open a basic bank account. They don't have the credit nor min balance to open one and keep it open, a lot of that is because when they do actually have one they overdraw constantly.
Apparently when you have some kind of combo of bad credit and overdraws and other bad banking behavior banks keep track of it.
Therefore, they literally have no where to cash checks but those places that charge like $20 to cash a $300 check.
Point being, who the hell sees those stores and thinks they look legit? I don't think anyone knows they are using them wisely, people go there knowing it's dumb but it's their only or last resort.
Should it really be illegal to eliminate someone's last resort? Doing so would be great for some, but it would be terrible for some too.
This post was edited on 2/5/18 at 8:37 pm
Posted on 2/5/18 at 9:25 pm to OweO
quote:
For how many months? Yeah, I am not exactly sure, but I think I read somewhere where there are some places that charge as much as almost 50% interest.
I got junk mailed for Republic Finance, 43% interest.
Posted on 2/5/18 at 10:10 pm to KiwiHead
They prey on people who do not know anything about personal finance. I've got an employee that was paying debt with debt. Got him over to a debt consolidation place and he just made his last payment
Posted on 2/5/18 at 11:32 pm to KiwiHead
Netflix, “Dirty Money” has a segment on payday loans. It’s a real eye opener!!!
Posted on 2/6/18 at 12:37 am to baldona
quote:
Should it really be illegal to eliminate someone's last resort? Doing so would be great for some, but it would be terrible for some too.
Those that use rent-to-own stores are in exactly the same position as those that use pay day loans, no money, no credit, and unlikely to every have either. Without the rent-to- own places it would almost impossible for them to buy a refrigerator, they will pay out the arse for it, but would they be better off with no refrigerator?
Posted on 2/6/18 at 1:16 am to jmarto1
quote:
I've got an employee that was paying debt with debt. Got him over to a debt consolidation place and he just made his last payment
What was his debt from?
Posted on 2/6/18 at 2:21 am to lsufan1971
quote:
I think being a coke dealer is a little more reputable profession than pay day loans.
Hmm... this might actually be a good way to judge if something should be legal or not.
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