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Consumer Protection Agency Seeks Limits on Payday Lenders

Pay day loans

  • Regulate - Yes

    Votes: 36 81.8%

  • Regulate - No

    Votes: 7 15.9%

  • No opinion

    Votes: 1 2.3%
  • Total voters
    44
tres borrachos said:
So then never take a loan from a payday lender and you won't have any problems.

Installment loans and revolving credit loans don't work the same way, by the way. Not at all.
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From the lenders perspective they don't. No one is arguing that. I am saying for all intents and purposes, the way rolling over a pay day loan works, is that you pay a ton of interest and fees just like you would carrying a balance on a credit line with a 3 digit interest rate. For example, if you borrow 300 dollars and take 11 months to pay it off, and in the end pay over 600 dollars for a 300 dollar loan because you kept doing roll overs, then when difference does it make in terms of the technical details in how you got there.
 
SouthernDemocrat said:
From the lenders perspective they don't. No one is arguing that. I am saying for all intents and purposes, the way rolling over a pay day loan works, is that you pay a ton of interest and fees just like you would carrying a balance on a credit line with a 3 digit interest rate. For example, if you borrow 300 dollars and take 11 months to pay it off, and in the end pay over 600 dollars for a 300 dollar loan because you kept doing roll overs, then when difference does it make in terms of the technical details in how you got there.
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It isn't from the lender's perspective. It's a fact.

I suggest Googling "Installment Loan and Revolving Credit Differences" to learn why they are not the same kinds of loans at all.
 
tres borrachos said:
It isn't from the lender's perspective. It's a fact.

I suggest Googling "Installment Loan and Revolving Credit Differences" to learn why they are not the same kinds of loans at all.
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Which is what I said in my first sentence.
 
SouthernDemocrat said:
Which is what I said in my first sentence.
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No, it isn't. It's called "finance". It's called "different kinds of loans a borrowe can get". It has nothing to do with a lender's "perspective".

A bank can't hold a revolving loan on its books and call it an installment loan. An installment loan is paid in regular and equal payments over a specified (in advance) period of time. A revolving credit loan (like a credit card or line of credit) means that the lender has granted you a maximum amount of the lender's money that you can draw on as you choose. Payday loans are not revolving credit loans. The lender gives you money one time, and you agree to pay it back plus the fees or interest by x date. There is no open end agreement. It has an end.
 
tres borrachos said:
No, it isn't. It's called "finance". It's called "different kinds of loans a borrowe can get". It has nothing to do with a lender's "perspective".

A bank can't hold a revolving loan on its books and call it an installment loan. An installment loan is paid in regular and equal payments over a specified (in advance) period of time. A revolving credit loan (like a credit card or line of credit) means that the lender has granted you a maximum amount of the lender's money that you can draw on as you choose. Payday loans are not revolving credit loans. The lender gives you money one time, and you agree to pay it back plus the fees or interest by x date. There is no open end agreement. It has an end.
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You know you are trying to explain reality to a Democrat, right?
 
tres borrachos said:
No, it isn't. It's called "finance". It's called "different kinds of loans a borrowe can get". It has nothing to do with a lender's "perspective".

A bank can't hold a revolving loan on its books and call it an installment loan. An installment loan is paid in regular and equal payments over a specified (in advance) period of time. A revolving credit loan (like a credit card or line of credit) means that the lender has granted you a maximum amount of the lender's money that you can draw on as you choose. Payday loans are not revolving credit loans. The lender gives you money one time, and you agree to pay it back plus the fees or interest by x date. There is no open end agreement. It has an end.
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Yes, each one has an end. However, when you take that loan and then roll it over to a new agreement for months on end, each time just paying the interest for the loan term to do so, then you are paying a ton of money in interest and fees by the time you finally pay it off.

So from the borrowers perspective, they paid out a ton of money just like they would to a loan shark for a short term loan. The payday lenders like for people to do this, in fact that is how they make their money. If everyone that got a payday loan simply paid the thing off as soon as the original loan was due, payday lenders would be out of business.

I am not an idiot (nor are the majority of people on here that seem to be agreeing with my position on this). I get what is going on. Of course its technically a new loan every time, but that doesn't change the fact that Joe walks into a payday loan shop, gets a short term loan for 300 dollars, can't pay it off when its due, thus takes another loan out and pays interest and fees every time he does so until its paid off. Do you not understand that?
 
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tres borrachos said:
Yup. That's the thing. Anyone who can get a loan from a reputable lender wouldn't go to a payday lender. The people who are there are there because they screwed up and trashed their own credit. There's a price to pay for not paying your lender back as agreed and on time.
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Not always. ;) I used one for a dire emergency when I needed the cash right away. I did shop around the payday loan places cause I'm cheap like that and found a place to do it with little fees. But I never would have done it if I thought it would put me behind or I couldn't repay it and the fee was actually ended up lower than an overdraft fee so it worked out fine.

I know what you mean about personal responsibility. I have a friend who is always behind or going into overdraft and crying and I thought maybe she needs some help that she just can't budget right and I felt bad. Then she gave me some old things of her daughters for mine and I found like 7 redbox movies in the bag and I casually asked her about them and she goes into a story how she didn't return them in and got charged a huge amount and wah wah wah and after that I gave up feeling anything bad for her.
 
SouthernDemocrat said:
Yes, each one has an end. However, when you take that loan and then roll it over to a new agreement for months on end, each time just paying the interest for the loan term to do so, then you are paying a ton of money in interest and fees by the time you finally pay it off.

So from the borrowers perspective, they paid out a ton of money just like they would to a loan shark for a short term loan. The payday lenders like for people to do this, in fact that is how they make their money. If everyone that got a payday loan simply paid the thing off as soon as the original loan was due, payday lenders would be out of business.

I am not an idiot (nor are the majority of people on here that seem to be agreeing with my position on this). I get what is going on. Of course its technically a new loan every time, but that doesn't change the fact that Joe walks into a payday loan shop, gets a short term loan for 300 dollars, can't pay it off when its due, thus takes another loan out and pays interest and fees every time he does so until its paid off. Do you not understand that?
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I didn't say you were an idiot. I said you were wrong when you were trying to claim that a payday loan is a revolving loan. It is not. And no amount of "Joe can't pay it back in the end so he has to take another one" doesn't change that.

If you take a 12 month personal unsecured loan, and at the end of 11 months you need more money so you take another 12 month personal loan for the same amount, and roll in the unpaid balance of your first loan into the new loan, that doesn't mean you had a revolving loan - ever. It means you took 2 installment loans.

Again, if you don't ever want to take a payday loan, don't take one. I never would either.
 
americanwoman said:
Not always. ;) I used one for a dire emergency when I needed the cash right away. I did shop around the payday loan places cause I'm cheap like that and found a place to do it with little fees. But I never would have done it if I thought it would put me behind or I couldn't repay it and the fee was actually ended up lower than an overdraft fee so it worked out fine.

I know what you mean about personal responsibility. I have a friend who is always behind or going into overdraft and crying and I thought maybe she needs some help that she just can't budget right and I felt bad. Then she gave me some old things of her daughters for mine and I found like 7 redbox movies in the bag and I casually asked her about them and she goes into a story how she didn't return them in and got charged a huge amount and wah wah wah and after that I gave up feeling anything bad for her.
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And you're the reason why these loans have a purpose, which is what I've been saying all along. There are a lot of people who take them because they need cash quickly, and they take them knowing they can pay them back. Most people - the ones who pay them back and the ones who don't - share one thing in common, which is a subprime credit score. There are exceptions to everything.

I have friends who whine about fees too, like the movies, when it turns out - uhhh, didn't return them on time.

Anyone can get into trouble. It's the ones who intentionally get themselves into trouble that annoy me.
 
Lursa said:
I dont know....for $500 for an emergency? Will a bank do that in about an hour?
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Not concerning the people that usually go to payday places they won't...Never forget the old saying, "the bank will only loan you the money if you don't need it"

Are there penalties there as well if you pay the money back within, say 1 week or 2?
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No. But they won't mitigate the payback amount either...For instance, if you borrow $500, with the agreement to pay back $575 in two weeks, but you come in within a week, it is still $575.

And did Tres B say that the payday loans arent reported to the credit bureaus?
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No, they aren't...But you do have to prove to them your paycheck, and residence, along with listing something you own worth the loan amount, so that I am sure they can petition to take it if you default.

But these places do something that is far worse if you ask me...See, in everyday terms...A person goes in there and borrows $500. because they are behind in rent, and the electric is about to be cut off. The payback is $575 in two weeks, but in two weeks they don't have the money to do that and pay their bills that are due, because they live paycheck to paycheck....So they go in to pay off the $575 and roll it over the next day for the original $500...and so on and so on...Now if they are unlucky enough to have that extend a year, they will have paid $1950. in interest on the original $500 that kept being rolled over, oh, and they still have to pay that back. So contrary to what Cephus or anyone else says in here about it being 26 separate loans or not, the end result is the original $500 is owed, never gets smaller, and they have paid 4 times the principle for the privilege of borrowing the original $500. It is to say the least the definition of usury....
 
For those that are defending Pay Day Loan practices, a quick search shows this and more.
Federal agency sues two Johnson County men, says they bilked payday loan customers out of millions | The Kansas City Star The Kansas City Star
Those companies allegedly made about $28 million in payday loans over one 11-month period, “extracting” more than $46.5 million in return, according to federal court records.

“Defendants’ tactics serve the single purpose of bilking cash-strapped consumers out of as much money as possible,” federal lawyers alleged in court filings.

Pennsylvania Sues Think Finance, Alleging Illegal Payday Loan Scheme

Pennsylvania is one of several states with laws prohibiting payday lending, but the often predatory products still find their way to consumers via online marketplaces and companies’ claiming affiliation with American Indian tribes. In an effort to crack down on such nefarious lenders, the state’s attorney general filed a consumer protection lawsuit against a Texas-based company for allegedly engineering a payday loan scheme over the internet.

Pennsylvania Attorney General Kathleen Kane announced yesterday that her office filed the suit against Think Finance Inc, a company behind a number of payday loan-like lenders including RISE Credit, for violating a number of the state’s laws by targeting Pennsylvania consumers for costly payday loans.
 
JANFU said:
For those that are defending Pay Day Loan practices, a quick search shows this and more.
Federal agency sues two Johnson County men, says they bilked payday loan customers out of millions | The Kansas City Star The Kansas City Star
Those companies allegedly made about $28 million in payday loans over one 11-month period, “extracting” more than $46.5 million in return, according to federal court records.

“Defendants’ tactics serve the single purpose of bilking cash-strapped consumers out of as much money as possible,” federal lawyers alleged in court filings.

Pennsylvania Sues Think Finance, Alleging Illegal Payday Loan Scheme

Pennsylvania is one of several states with laws prohibiting payday lending, but the often predatory products still find their way to consumers via online marketplaces and companies’ claiming affiliation with American Indian tribes. In an effort to crack down on such nefarious lenders, the state’s attorney general filed a consumer protection lawsuit against a Texas-based company for allegedly engineering a payday loan scheme over the internet.

Pennsylvania Attorney General Kathleen Kane announced yesterday that her office filed the suit against Think Finance Inc, a company behind a number of payday loan-like lenders including RISE Credit, for violating a number of the state’s laws by targeting Pennsylvania consumers for costly payday loans.
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And people who actually commit crimes ought to be prosecuted. Who has said otherwise? Now prove the rest are committing crimes.
 
Cephus said:
And people who actually commit crimes ought to be prosecuted. Who has said otherwise? Now prove the rest are committing crimes.
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Nope- That is left to the States who are laying charges.
 
JANFU said:
Nope- That is left to the States who are laying charges.
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Which doesn't mean anyone has broken any laws, you can't charge people with retroactive crimes. This is all just liberal pissing and moaning.
 
Cephus said:
Glad to see you agree with me. Now about all the rest of the lenders who are not breaking the law? Or are you going to refuse to address that?
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Mornin' Cephus...While PayDay lenders may be acting within the limits of the law as it exists today, that doesn't mean that rational people can't look at what they are doing and agree that as dumb as it is to use these places for anything, that their practice mocks ethics, and skirt the laws intent, right?
 
I like the strawman argument that several have thrown up here. Nobody has suggested that these businesses have no place or utility. What is being suggested is that like any other commerce, they need strict regulation to protect consumers, that's all. I'm glad to see the polling remain as it is, and that there are only a few loose screws.
 
Cephus said:
Glad to see you agree with me. Now about all the rest of the lenders who are not breaking the law? Or are you going to refuse to address that?
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No problem. They will be regulated. Or are you against regulation?
 
j-mac said:
Mornin' Cephus...While PayDay lenders may be acting within the limits of the law as it exists today, that doesn't mean that rational people can't look at what they are doing and agree that as dumb as it is to use these places for anything, that their practice mocks ethics, and skirt the laws intent, right?
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So what do the poor do when you close down this avenue? Just hand over government money that they don't have to pay back? These places exist because there is a demand. How do you fill that demand?
 
JANFU said:
No problem. They will be regulated. Or are you against regulation?
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They're already regulated. You want to drive them out of business.
 
Cephus said:
They're already regulated. You want to drive them out of business.
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Not well regulated, each State has differing rules, some States do not permit them to operate. Under the CPA this will make regualions standard across the board.
As to being run out of business, not as long as there are people that live pay check to pay check.
 
JANFU said:
Not well regulated, each State has differing rules, some States do not permit them to operate. Under the CPA this will make regualions standard across the board.
As to being run out of business, not as long as there are people that live pay check to pay check.
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They are not "well" regulated is the entire point here. They are charging confiscatory rates, and ruining people who are already in a bad way. That's the whole reason that the CPA is looking into this. I'm amazed that there's like three people in America that sympathise with the predatory practices of PayDay Lenders, and they're all on this board spending significant amounts of their time defending it and seemingly with no shame. Again I'll say, if its 425% or broke! then let them disappear into the annals of history of failed US enterprises.
 
Montecresto said:
They are not "well" regulated is the entire point here. They are charging confiscatory rates, and ruining people who are already in a bad way. That's the whole reason that the CPA is looking into this. I'm amazed that there's like three people in America that sympathise with the predatory practices of PayDay Lenders, and they're all on this board spending significant amounts of their time defending it and seemingly with no shame. Again I'll say, if its 425% or broke! then let them disappear into the annals of history of failed US enterprises.
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Let them open their books to the CPA.
http://dealbook.nytimes.com/2015/02/08/consumer-protection-agency-seeks-limits-on-payday-lenders/

Few people can, the data suggest, leaving borrowers to either roll over their loans, heaping on more fees, or take out new ones altogether. The bureau found that during a 12-month period, borrowers took out a median of 10 loans. Borrowers paid median fees of $458. The median amount borrowed was $350. And more than 80 percent of loans were rolled over or renewed within two weeks.

That churn is central to many lenders’ business, according to data from the bureau. Borrowers who take out 11 or more loans each year account for roughly 75 percent of the fees generated.
 
JANFU said:
Let them open their books to the CPA.
http://dealbook.nytimes.com/2015/02/08/consumer-protection-agency-seeks-limits-on-payday-lenders/

Few people can, the data suggest, leaving borrowers to either roll over their loans, heaping on more fees, or take out new ones altogether. The bureau found that during a 12-month period, borrowers took out a median of 10 loans. Borrowers paid median fees of $458. The median amount borrowed was $350. And more than 80 percent of loans were rolled over or renewed within two weeks.

That churn is central to many lenders’ business, according to data from the bureau. Borrowers who take out 11 or more loans each year account for roughly 75 percent of the fees generated.
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Do you think that you and I have a disagreement? I posted what I did to bolster what you've been saying!
 
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