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Thread: Consumer Protection Agency Seeks Limits on Payday Lenders

  1. #281
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    Re: Consumer Protection Agency Seeks Limits on Payday Lenders

    Quote Originally Posted by Deuce View Post
    There isn't a need for predatory interest rates designed at creating a perpetual debt cycle that they know desperate people must enter into and will probably never get out.
    You know, having been down, and I mean really down at points in my life, I've often daydreamed about what I would do if I were to ever win something like the recent powerball, over 300 million after taxes....One thing, would be philanthropic in nature in setting up a trust that brings in younger couples that have real budget issues, and bail them out with a small interest loan, and as a pre condition to the loan have an accountant teach them how to budget.
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    Re: Consumer Protection Agency Seeks Limits on Payday Lenders

    Quote Originally Posted by j-mac View Post
    I don't know, I'm not in the business...Clearly 400% APR is not.



    Why not. They are on a shared network within a state....You can't for instance go to Advance America and write for $500, then go down the street and walk into Check into Cash and write another $500....What the real problem is, are the online ones that don't have to have a brick and mortar store front...They skirt the system in even worse ways.

    In any case, these places are loan sharking with the appearance of legitimacy. As I said before, I don't like the government inserting themselves in business, but in this case you can hardly call these people legitimate business people.
    You don't have to be "in the business". You said that the $75 cost for a $500 2 week loan is too high. You have to say what you think is a fair cost for the loan? You keep using "400%" as an argument about why $75 is too high, and that isn't an argument. Cephus is 100% correct when he says you're all getting so wrapped up in that 400% number that you aren't getting what that number actually is. So forget the APR and tell me - what is a reasonable fee for a lender to provide $500 to a credit risk with no security? It's a simple question.

    These places have the appearance of legitimacy because they are legitimate. There are people who need $500 for an emergency but they don't get paid for 2 weeks. Those people who can't get loans from a bank or credit union will gladly pay $75 to avoid their electricity getting shut off, avoid their car getting towed to a garage because 4 lugnuts fell off and they need a new wheel but can't afford it, avoid wracking up $150 in return check charges because they didn't balance their checkbooks, avoid getting $50 late fees, and so on. Those are the people who rely on payday lenders. They're the ones who are responsible enough to know that in 2 weeks they'll have $575 to pay the lender back. There is absolutely nothing illegitimate about that, and if those people are willing to pay $75 to borrow someone else's $500 for 2 weeks, who are you or me or Elizabeth Warren to say that's a bad thing?
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  3. #283
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    Re: Consumer Protection Agency Seeks Limits on Payday Lenders

    Quote Originally Posted by Deuce View Post
    There isn't a need for predatory interest rates designed at creating a perpetual debt cycle that they know desperate people must enter into and will probably never get out.
    Nor is there such a thing. These people have created their own perpetual debt cycle, they can easily break it, they just have to stop spending more money than they bring in. When the desperation is self-inflicted, color me unimpressed.
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  4. #284
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    Re: Consumer Protection Agency Seeks Limits on Payday Lenders

    Quote Originally Posted by tres borrachos View Post
    You don't have to be "in the business". You said that the $75 cost for a $500 2 week loan is too high. You have to say what you think is a fair cost for the loan? You keep using "400%" as an argument about why $75 is too high, and that isn't an argument. Cephus is 100% correct when he says you're all getting so wrapped up in that 400% number that you aren't getting what that number actually is. So forget the APR and tell me - what is a reasonable fee for a lender to provide $500 to a credit risk with no security? It's a simple question.
    It's not the $75 on $500 that bothers me so much for the two week period. It's the way that these places herd their customers toward revolving accounts that never touch the principle, and employ a model that seeks to keep from their customers the option of splitting the amount into three payments to pay it off. When someone goes in there for the first time they need to take a paystub, electric bill, and drivers licence. Using that the clerk will use a calculation of how much they are allowed to write, along with establishing their payback date. No where in that process is any thought that these people can't afford the payback. IOW, if you were lending me $500. for two weeks, and you wanted $575 back. Now I am desperate to get the money, and will agree to anything, but you look at my paystub and I make $300 per week take home....Are you going to lend me the $500? Would you think that would be an ethical thing to do?

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    Re: Consumer Protection Agency Seeks Limits on Payday Lenders

    These places have the appearance of legitimacy because they are legitimate.

    "The pitfalls of borrowing from storefront payday lenders -- companies that offer short-term loans with high interest rates -- are already well-documented. Regulators and consumer groups have long warned such loans can trap people in vicious cycles of debt. Less is known about online payday lenders, which offer the same service with the added allure of the transaction happening completely on the Web.


    Consumer groups say these types of lenders may be even riskier for struggling borrowers than brick-and-mortar lenders, leading consumers into even more hopeless financial quagmires.


    “They loan to people not even caring whether they can pay the whole thing off,” said Jay Speer, the executive director of the Virginia Poverty Law Center. “They just want a certain amount every couple weeks -- as much as they can beat out of you until you default.”


    Payday Lenders Are Using The Internet To Evade State Law


    "Earlier this month, Manhattan District Attorney Cyrus R. Vance, Jr. brought charges against a Tennessee-based businessman and the 12 companies he allegedly created to offer payday loans to New Yorkers at illegally high rates.
    With one website, MyCashNow.com, based in the West Indies and others incorporated in various states, Carey Vaughn Brown is accused of trying to escape legal regulations and usury laws. New York usury laws cap loan interest rates at 25 percent, but prosecutors say Brown’s companies extended loans with rates that ranged from 350 to 650 percent.
    Brown is also accused of disguising the fact that that his companies would oversee an entire loan process. For example, a borrower would apply for a loan on one website Brown owned, their information would be transferred to another company that extended the loan and a third company would collect payments. By managing all of the companies involved in the loan lifecycle, prosecutors say that Brown could profit off of expensive loans in states that banned them. Chief operating officer Ronald Beaver and legal counsel Joanna Temple have also both been indicted."


    https://blog.creditkarma.com/news-tr...est-rate-laws/


    "Aggressive collection practices[edit]
    In US law, a payday lender can use only the same industry standard collection practices used to collect other debts, specifically standards listed under the Fair Debt Collection Practices Act. The FDCPA prohibits debt collectors from using abusive, unfair, and deceptive practices to collect from debtors. Such practices include calling before 8 o'clock in the morning or after 9 o'clock at night, or calling debtors at work.[27]


    In many cases, borrowers write a post-dated check (check with a future date) to the lender; if the borrowers don't have enough money in their account, their check will bounce.


    Payday lenders will attempt to collect on the consumer's obligation first by simply requesting payment. If internal collection fails, some payday lenders may outsource the debt collection, or sell the debt to a third party.


    A small percentage of payday lenders have, in the past, threatened delinquent borrowers with criminal prosecution for check fraud.[28] This practice is illegal in many jurisdictions and has been denounced by the CFSA, the industry's trade association.


    Pricing structure of payday loans[edit]
    The payday lending industry argues that conventional interest rates for lower dollar amounts and shorter terms would not be profitable. For example, a $100 one-week loan, at a 20% APR (compounded weekly) would generate only 38 cents of interest, which would fail to match loan processing costs. Research shows that on average, payday loan prices moved upward, and that such moves were "consistent with implicit collusion facilitated by price focal points".[29]


    Consumer advocates and other experts argue, however, that payday loans appear to exist in a classic market failure. In a perfect market of competing sellers and buyers seeking to trade in a rational manner, pricing fluctuates based on the capacity of the market. Payday lenders have no incentive to price their loans competitively since loans are not capable of being patented. Thus, if a lender chooses to innovate and reduce cost to borrowers in order to secure a larger share of the market the competing lenders will instantly do the same, negating the effect. For this reason, among others, all lenders in the payday marketplace charge at or very near the maximum fees and rates allowed by local law.[24]"


    Payday loan - Wikipedia, the free encyclopedia


    Anyone in business with these types of practices, I don't consider legitimate.

    continued
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    Re: Consumer Protection Agency Seeks Limits on Payday Lenders

    There are people who need $500 for an emergency but they don't get paid for 2 weeks. Those people who can't get loans from a bank or credit union will gladly pay $75 to avoid their electricity getting shut off, avoid their car getting towed to a garage because 4 lugnuts fell off and they need a new wheel but can't afford it, avoid wracking up $150 in return check charges because they didn't balance their checkbooks, avoid getting $50 late fees, and so on. Those are the people who rely on payday lenders. They're the ones who are responsible enough to know that in 2 weeks they'll have $575 to pay the lender back. There is absolutely nothing illegitimate about that, and if those people are willing to pay $75 to borrow someone else's $500 for 2 weeks, who are you or me or Elizabeth Warren to say that's a bad thing?

    Come on Tres....You know me better than that...I am staunch conservative, ask anyone....But this group of criminals are a blight on the nation, and if they are out of business I wouldn't shed a tear....They are scum.
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    Re: Consumer Protection Agency Seeks Limits on Payday Lenders

    Quote Originally Posted by j-mac View Post
    It's not the $75 on $500 that bothers me so much for the two week period. It's the way that these places herd their customers toward revolving accounts that never touch the principle, and employ a model that seeks to keep from their customers the option of splitting the amount into three payments to pay it off. When someone goes in there for the first time they need to take a paystub, electric bill, and drivers licence. Using that the clerk will use a calculation of how much they are allowed to write, along with establishing their payback date. No where in that process is any thought that these people can't afford the payback. IOW, if you were lending me $500. for two weeks, and you wanted $575 back. Now I am desperate to get the money, and will agree to anything, but you look at my paystub and I make $300 per week take home....Are you going to lend me the $500? Would you think that would be an ethical thing to do?

    continued
    What is a reasonable fee? It's a very simple question.
    Horse sense is the thing a horse has which keeps it from betting on people. ~W.C. Fields

  8. #288
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    Re: Consumer Protection Agency Seeks Limits on Payday Lenders

    Quote Originally Posted by j-mac View Post
    Come on Tres....You know me better than that...I am staunch conservative, ask anyone....But this group of criminals are a blight on the nation, and if they are out of business I wouldn't shed a tear....They are scum.
    What is a reasonable fee for them to charge, j-mac? You say $75 for a $500 loan is too high. I'm not trying to be a jerk or doubt that you're a conservative, but the argument you are making is that the fee is too high. What should it be?
    Horse sense is the thing a horse has which keeps it from betting on people. ~W.C. Fields

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    Re: Consumer Protection Agency Seeks Limits on Payday Lenders

    Quote Originally Posted by tres borrachos View Post
    What is a reasonable fee for them to charge, j-mac? You say $75 for a $500 loan is too high. I'm not trying to be a jerk or doubt that you're a conservative, but the argument you are making is that the fee is too high. What should it be?
    I know Tres...but that's the thing, it's not that the fee is necessarily too high, but rather the amount of times you can roll over the original $500.

    Like I said, maybe the answer is limiting the times you can take a loan to 4 per year.
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    Re: Consumer Protection Agency Seeks Limits on Payday Lenders

    Quote Originally Posted by j-mac View Post
    I know Tres...but that's the thing, it's not that the fee is necessarily too high, but rather the amount of times you can roll over the original $500.

    Like I said, maybe the answer is limiting the times you can take a loan to 4 per year.
    Which doesn't change a thing really. These people need that money. You can put all the controls on the lenders that you want, it doesn't change the fact that these people need that money. If a legal means vanishes, they'll just turn to an illegal means. You can't make these people stop needing the money by wishing really hard. So what is your workable solution?
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