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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
But that makes no sense, again, because most states have very strict rules on maximum amounts of payday loans, and I think the highest amount is $1500. Gamblers make up a percentage, but so do smokers, shoppers, people with cars, gum chewers, etc.


You have to remember that it isn't the single transaction that's the problem. It's the frequency of repeated transactions. Someone with a gambling problem may well go back every week for $500 and pay the $100 fee for the privilege every time. That's especially true if it means their husband or wife is less likely to find out what they're doing.
 
Nope.

People that are hooked on gambling or drugs or whatever else tend to make bad decisions anyway. They don't need a whole lot of additional help in that direction.

My contention is that a lot of people who use these services don't really need to. Many of them, if not most of them, could avoid the whole thing if they simply made some better personal financial decisions.

It's life and there's a pretty heavy tax on "stupid". These places are part of that tax.

That is their problem. If they make stupid decisions, they bear the responsibility for those stupid decisions. I thought conservatives were supposed to understand personal responsibility. I guess not.
 
Why did the banks change their policy? I believe I answered it in an earlier post.
What do you suggest?

You actually didn't answer it in an earlier post. You have yet to acknowledge why banks changed their policies, which I posted.

And it has nothing to do with your OP which is about the regulation of payday lenders.
 
They are not a 300% interest rate, that's utterly absurd and a complete lie, cooked up by opponents. They are usually 2 week loans meant to get you through to your next paycheck. Last I was aware, the highest loan allowable by law was $300 with a $40 fee attached. You got $300, you had to pay back $340. Where do you get the idea that $40 is 300% of $300?

Why don't you read the link in the OP before going off half-cocked like that?
 
That is their problem. If they make stupid decisions, they bear the responsibility for those stupid decisions. I thought conservatives were supposed to understand personal responsibility. I guess not.

Now you lost me. Where the hell did I say that there's no personal responsibility involved? What the hell do you think a "stupid tax" is anyway?
 
You have to remember that it isn't the single transaction that's the problem. It's the frequency of repeated transactions. Someone with a gambling problem may well go back every week for $500 and pay the $100 fee for the privilege every time. That's especially true if it means their husband or wife is less likely to find out what they're doing.

If someone who has bad credit, no savings and no collateral, and is hiding an addiction and financial transactions from a spouse, that person has bigger problems than payday loans.
 
Why did the banks change their policy? I believe I answered it in an earlier post.
What do you suggest?

They changed their policies because the risk was too high. Ultimately, this is just a take off on the pawn shop idea for people who don't have collateral. The fees aren't really much different, you either go in and pay off your loan or you lose your collateral. Loaning money isn't a charity, you have to balance the risks against the rewards and there is a ton of risk in this because a lot of people bounce checks and run away with the money and have to be chased around.

I would suggest that people just be responsible with their money, but we know how well that works.
 
You have to remember that it isn't the single transaction that's the problem. It's the frequency of repeated transactions. Someone with a gambling problem may well go back every week for $500 and pay the $100 fee for the privilege every time. That's especially true if it means their husband or wife is less likely to find out what they're doing.

And whose fault is this again?
 
Why don't you read the link in the OP before going off half-cocked like that?

He was correct. You read this in the OP incorrectly:

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.

A single payday loan (not median of people over a 12 month period) has limits on both the fees and the interest rate. In fact, many of them are sold as a "compare this to the cost of a bounced check" advantage.
 
Now you lost me. Where the hell did I say that there's no personal responsibility involved? What the hell do you think a "stupid tax" is anyway?

If people do stupid things, they deserve what they have coming to them. Trying to limit the damage they can do to themselves because they are too stupid to control their impulses isn't an exercise in personal responsibility, but in authoritarian control.
 
Why don't you read the link in the OP before going off half-cocked like that?

It makes me wonder if you read it, or at least understood it. The only people who have problems are the ones who violate their initial agreement, ie. rolling over their loan again and again. Of course, the article isn't telling you the truth, they are playing numbers games. Rolling over a loan, say the $340 loan I mentioned earlier, they have to pay back the $40, then they can put off repaying the principle of the loan for another couple of weeks. These are all separate loans, yet the article tries to give you an APR on a 2-week loan. It's dishonest hackery.
 
"..The size and ownership of the industry is both startling and unsettling for many. This billion dollar business counts as its major investors Barclays Global Investors UK Holdings Ltd. who has approximately $177 million invested in securities associated with payday loan organizations and The Vanguard Group, Inc. with roughly $115 million of similar industry assets. Other large institutional holders include Thomas W. Smith with over $79 million invested in the industry. Smith is the senior partner of Prescott Investors and serves as chairman of the board of the National Center for Policy Analysis (NCPA) a nonprofit organization whose stated goal is to develop and promote private alternatives to government regulation and control, solving problems by relying on the strength of the competitive, entrepreneurial private sector . Banking organizations, also large institutional owners of payday lenders, include Bank of New York Mellon Corporation with approximately $25 million invested in payday lending interests, JP Morgan Chase & Company holding about $21 million in such investments, and Bank of America Corporation with roughly $2 million in similar assets. Finally, and perhaps most troubling, are public funds invested in the industry such as CALPERS (California ‐ Public Employees Retirement System) that holds slightly more than a quarter of a million dollars in public employee retirement resources in the form of payday lender investments....."
https://www.mccneb.edu/financialplanning/pdf/payday_lenders_article_february_18.pdf

Note that the same banks that can choose to avoid locating in low income neighborhoods profit from payday lending operations.
 

The problem is, for the people who are most likely to get payday loans, none of those work. They have little or no consistent income, hence no bank or credit union will give them anything and credit counseling requires that you have an income sufficient to pay the bills you already have, it doesn't give you any more money to play with. These are typically people way over their heads already, who probably ought to just declare bankruptcy, but probably already have and can't again, who just want a few dollars to make rent or get groceries. These are not people who can, or probably ever will, be able to fix their financial life.
 
For people with bad credit, no collateral, needing money in an emergency, they serve a purpose.

They serve a purpose, true, and hopefully those individuals that find themselves in the unfortunate circumstance of needing assistance of that nature find their way out. But in the mean time, the lenders should be regulated to protect people that are hopefully only temporarily in a tough spot aren't injured further by predatory interest rates. If a guy with an 800 pt. score gets 5% and a guy with 525 gets 10% (arbitrary numbers before you jump on that) I haven't an issue with that. But 25-30%, that's over the top. America needs consumer protection.
 
"Orange-based lender CashCall Inc. has reached a settlement with the state in a predatory-lending investigation. The deal announced Thursday calls for CashCall to pay $1 million in penalties and make refunds to harmed consumers. At issue were small consumer loans that CashCall offered for "up to" $2,600, $5,000 or $10,000. The state claimed that CashCall steered consumers into taking loans larger than they needed because there are no interest rate restrictions on loans of $2,500 or more." On the loans at issue, CashCall typically charged annual interest of 135 percent or more, and sometimes up to 179 percent," the state Department of Business Oversight said in a statement announcing the settlement.

Besides the fine, CashCall will pay harmed consumers $125 apiece..This is the latest in a series of enforcement actions against CashCall. Federal regulators filed a lawsuit against the company in 2013, claiming it was using deceptive and abusive practices to collect money that consumers did not owe...."
O.C.-based CashCall fined for predatory lending, will pay refunds- The Big Blog: Orange County Register
 
The problem is, for the people who are most likely to get payday loans, none of those work. They have little or no consistent income, hence no bank or credit union will give them anything and credit counseling requires that you have an income sufficient to pay the bills you already have, it doesn't give you any more money to play with. These are typically people way over their heads already, who probably ought to just declare bankruptcy, but probably already have and can't again, who just want a few dollars to make rent or get groceries. These are not people who can, or probably ever will, be able to fix their financial life.

I just finished reading the article. That's an old article and even credit unions won't make unsecured loans anymore to people with bad credit. Credit counseling won't help anyone get short term money. Cash advances on credit cards (which were suggested as an alternative) are an equally poor decision.

People who need payday loans are, as you say, in very deep financial trouble to begin with. I'm confused how payday lenders are called names like "vultures" and other things. It isn't their fault that they offer a service to people who are spending beyond their means and got themselves in trouble.
 
They serve a purpose, true, and hopefully those individuals that find themselves in the unfortunate circumstance of needing assistance of that nature find their way out. But in the mean time, the lenders should be regulated to protect people that are hopefully only temporarily in a tough spot aren't injured further by predatory interest rates. If a guy with an 800 pt. score gets 5% and a guy with 525 gets 10% (arbitrary numbers before you jump on that) I haven't an issue with that. But 25-30%, that's over the top. America needs consumer protection.

So the guy with the 525 score needs to work on catching up with his bills and paying down his debt, not borrowing more money.
 
They serve a purpose, true, and hopefully those individuals that find themselves in the unfortunate circumstance of needing assistance of that nature find their way out. But in the mean time, the lenders should be regulated to protect people that are hopefully only temporarily in a tough spot aren't injured further by predatory interest rates. If a guy with an 800 pt. score gets 5% and a guy with 525 gets 10% (arbitrary numbers before you jump on that) I haven't an issue with that. But 25-30%, that's over the top. America needs consumer protection.

No, America needs smarter, more responsible people who don't get into credit trouble in the first place. The guy with the 525 credit score *EARNED* that score, they aren't just handed out arbitrarily. They made their bed. Why are you so opposed to them lying in it? You have to prove yourself worthy of getting a loan by showing a history of paying back money borrowed. These people are not worthy of any kind of loan, that's what their credit score means. Therefore anyone crazy enough to give them a loan at all is going to charge a lot more because there is a lot more risk involved. Many of these people, as the article shows, are incapable or unwilling to pay those loans back.
 
Not sure in the US but they would have a Banking Act? Lending of monies- the worst case would be leaving it to the States- Canada left it to the provinces and still an issue here.

Not sure that replacing Edmonton with Ottawa resolves any issues. I am fond of WAC Bennet's sentiment "anything from Ottawa can't be good for BC"

Most of these operations skirt traditional banking laws, just as the check cashing stores do, thus specific regs are required. While the usury rates are still high, they are more reasonable, my issue is the need for them in the first place
 
It makes me wonder if you read it, or at least understood it. The only people who have problems are the ones who violate their initial agreement, ie. rolling over their loan again and again. Of course, the article isn't telling you the truth, they are playing numbers games. Rolling over a loan, say the $340 loan I mentioned earlier, they have to pay back the $40, then they can put off repaying the principle of the loan for another couple of weeks. These are all separate loans, yet the article tries to give you an APR on a 2-week loan. It's dishonest hackery.

So "let's not call it 'interest,' let's call it a 'rollover,' dudes!" Right.

Fools nobody except you.
 
You actually didn't answer it in an earlier post. You have yet to acknowledge why banks changed their policies, which I posted.

And it has nothing to do with your OP which is about the regulation of payday lenders.

At one time local managers, knowing the person could make or break a loan. Now it goes thru a process, computer program that makes it a clear cut decision. Managers that overrule a decision, these decisions are collected and are part and parcel of their bonuses. Overriding a comp prog decision, taking it to a higher level, waste of time.
If you wish to research this, fell free to. I have no intention of doing this.
 
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