• This is a political forum that is non-biased/non-partisan and treats every person's position on topics equally. This debate forum is not aligned to any political party. In today's politics, many ideas are split between and even within all the political parties. Often we find ourselves agreeing on one platform but some topics break our mold. We are here to discuss them in a civil political debate. If this is your first visit to our political forums, be sure to check out the RULES. Registering for debate politics is necessary before posting. Register today to participate - it's free!

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:
Then you, having grown up poor, probably understand as much as anyone the need to be able to borrow money when you need it for an emergency. And that's what payday loans were intended for - emergency cash. For some reason they've become something else. And if they're driven out of business, then the people who do need them on occasion won't have access to them. Why should those people be penalized because other people need to be protected from themselves?

And what's the alternative for the poor people?
Click to expand...

I grew up poor thus I understand the trap of payday loans. If you cannot pay your bills with this paycheck, then how are you going to pay them with the next, plus pay back the principle on your loan, plus pay back the exorbitant interest on that principle? The vast majority of the time you can't and that is why some 80% of payday loans get rolled over. The service payday loans offer to a poor community is no different than the service a loan shark offers a poor community. They are a leach upon the communities they are in. They prey upon the working poor, people that are desperate and have no real concept of the cost of credit.

Let's say you are late on your rent. You can do one of the following:

1. You can go down to the local payday lender and hopefully borrow the money you don't have.

2. You can have an embarrassing talk with your landlord and hopefully work something out.

Of those two options which do you think is the better? I would say option 2. It is always a bad idea to borrow money to pay for a recurring expense that you cannot currently afford because it only pushes that problem down the road a little bit and exacerbates it. The problem is payday lenders are like making a deal with the devil in that they make it seem so painless to come in and take option 1 in such a scenario.

The fact is at least 9 out 10 people that walk into a payday lender are making a bad choice by doing so. There is almost always a better option than a payday lender if you need money. If you need money for food, then worst case scenario you can go to a food bank or church. If you are short on rent its always better to try to work something out with your landlord. If you are short on a car payment you can call the car lot and work something out (and if you are several payments late then the payday lender only delays the inevitable). The worst thing you can ever do is go down and borrow money for expenses you cannot afford now against future earnings that will be just as insufficient for paying your expenses as your current paycheck was.
 
Cephus said:
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?
Click to expand...


40 300 14 days
13.33% 0.95% 342.86%


actually it exceeds 300% if my math is correct

$ 40 charge over 14 days equates to a daily rate of .95% x 360 days most banks use for a calculation = 342.86%

someone can check my math, but i believe i am right

these are predatory lending places....i hate them and the car title places

but....should they be regulated?

no....if you going there you have no other options.....and it is always buyer beware
 
tres borrachos said:
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.
Click to expand...

Yes, he needs to do that too, and commerce needs regulation to protect Americans from predatory business practices. I can assure you that you wouldn't want to live in an unregulated society.
 
Cephus said:
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.
Click to expand...

I'm well aware of the various reasons why people sometimes end up with a 525 credit score. It's not ALL an issue of irresponsibility. Furthermore, some people have 90 IQ's and some have 140 IQ's, some people leave college with a 2.7 and a few leave with 4.0. Regulation is about protecting people, not about punishing or holding people back.
 
American said:
4 alternatives to payday lending
Click to expand...


Well they forgot once they regulate it down or make it so difficult for people to get loans. Then Loan Sharking will return. For some people either way they will need to find a way to get the money.


A payday loan doesn't solve a financial crisis; it creates one," says Uriah King, senior policy associate at the Center for Responsible Lending in Durham, N.C. "The typical payday borrower ends up in a debt trap because they have to go back and get another payday loan to help repay the first one, then another, then another."

As the payday lending industry becomes more tightly regulated and industry opponents publicize its shortcomings, consumers may wonder what alternative options are available.....snip~

Read more: 4 alternatives to payday lending
Follow us: @Bankrate on Twitter | Bankrate on Facebook
 
MMC said:
Well they forgot once they regulate it down or make it so difficult for people to get loans. Then Loan Sharking will return. For some people either way they will need to find a way to get the money.
Click to expand...

Bingo!

Just the sight of these places as I'm driving down the street is enough to make my skin crawl but you are absolutely correct. The people who use them are desperate, foolish, uneducated, addicted, et al. Closing these places down will give rise to alternatives that are even worse and regulating them to the point where it becomes unprofitable for them to operate within the risk pool that they are dealing with will do just that.
 
Jack Fabulous said:
Bingo!

Just the sight of these places as I'm driving down the street is enough to make my skin crawl but you are absolutely correct. The people who use them are desperate, foolish, uneducated, addicted, et al. Closing these places down will give rise to alternatives that are even worse and regulating them to the point where it becomes unprofitable for them to operate within the risk pool that they are dealing with will do just that.
Click to expand...


Well somebody will have to meet their needs.....offers will be made.

th


Naturally high interest too. :mrgreen:
 
Well then, the poll results are positive anyway, seems only a minority have lost their minds!
 
All this will do is eliminate the businesses altogether, so these folks will have ZERO legal options. It'll be loan sharks, broken legs, more prostitution and drug dealing, and generally more crime.

Unless the government steps in of course and steals it for them legally.

These places are ugly and unseemly, but they do serve a purpose. And the ridiculous interest rates are necessary for the high number of defaults that occur. They are loaning money to the worst credit scores in the nation after all.
 
Erod said:
All this will do is eliminate the businesses altogether, so these folks will have ZERO legal options. It'll be loan sharks, broken legs, more prostitution and drug dealing, and generally more crime.

Unless the government steps in of course and steals it for them legally.

These places are ugly and unseemly, but they do serve a purpose. And the ridiculous interest rates are necessary for the high number of defaults that occur. They are loaning money to the worst credit scores in the nation after all.
Click to expand...

Really now, predatory interest rates or nothing. Frankly, if these people need to rape the unfortunate to be happy, then let them go away.
 
Montecresto said:
Really now, predatory interest rates or nothing. Frankly, if these people need to rape the unfortunate to be happy, then let them go away.
Click to expand...

If half or more of your borrowers are going to default, what interest rate would you require if you had to loan your money to these folks?
 
Erod said:
All this will do is eliminate the businesses altogether, so these folks will have ZERO legal options. It'll be loan sharks, broken legs, more prostitution and drug dealing, and generally more crime.

Unless the government steps in of course and steals it for them legally.

These places are ugly and unseemly, but they do serve a purpose. And the ridiculous interest rates are necessary for the high number of defaults that occur. They are loaning money to the worst credit scores in the nation after all.
Click to expand...
In most cases I am for the free practice of business, but not in this case. "Payday loans" are loan sharking. And it isn't just the poor that get trapped by them.

When we first moved to SC, my wife took a job working in one of these places for a short time. The stories she would tell are heartbreaking. And in most cases all these people need is a little counseling. When she did that, she got in trouble with her boss.

These places are straight up evil.
 
j-mac said:
In most cases I am for the free practice of business, but not in this case. "Payday loans" are loan sharking. And it isn't just the poor that get trapped by them.

When we first moved to SC, my wife took a job working in one of these places for a short time. The stories she would tell are heartbreaking. And in most cases all these people need is a little counseling. When she did that, she got in trouble with her boss.

These places are straight up evil.
Click to expand...

In my state, if I wanted to loan you money, there is a limit on the interest I can charge you because more than that would be unfair. If I were a "bank or registered lending institution", I could charge you 3 times that amount and the sate would be like, "Go for it!!"
 
Erod said:
If half or more of your borrowers are going to default, what interest rate would you require if you had to loan your money to these folks?
Click to expand...

There's HUGE profits in these businesses! Regulation is a consumer protection, not a ban on reasonable profit. Hopefully CPA prevails.
 
Declan said:
In my state, if I wanted to loan you money, there is a limit on the interest I can charge you because more than that would be unfair. If I were a "bank or registered lending institution", I could charge you 3 times that amount and the sate would be like, "Go for it!!"
Click to expand...

Are we talking Arkansas?
 
j-mac said:
In most cases I am for the free practice of business, but not in this case. "Payday loans" are loan sharking. And it isn't just the poor that get trapped by them.

When we first moved to SC, my wife took a job working in one of these places for a short time. The stories she would tell are heartbreaking. And in most cases all these people need is a little counseling. When she did that, she got in trouble with her boss.

These places are straight up evil.
Click to expand...

There you have it, the best post in this thread. Should be settled, and I suspect that sound minds prevail in this and regulation is on its way.
 
j-mac said:
In most cases I am for the free practice of business, but not in this case. "Payday loans" are loan sharking. And it isn't just the poor that get trapped by them.

When we first moved to SC, my wife took a job working in one of these places for a short time. The stories she would tell are heartbreaking. And in most cases all these people need is a little counseling. When she did that, she got in trouble with her boss.

These places are straight up evil.
Click to expand...
Many think this is for the down and out, drunks, etc. Yet there are substantial numbers of working poor that 1 big bill, car repair for one, have no where to go.
A predatory business model, preying on the working poor.
 
JANFU said:
Many think this is for the down and out, drunks, etc. Yet there are substantial numbers of working poor that 1 big bill, car repair for one, have no where to go.
A predatory business model, preying on the working poor.
Click to expand...



Yep Janfu .....one lady they were talking about this morning on the radio worked two part time jobs. Had bad credit got a loan with 35% interest. Ended up in a crash totaling out the car and had to go and get another loan. Which she ended up having the car repo'ed. Had kids and doctors to deal with too.

Ended up going back to one of these Payday Loans to get another loan. No way out as she had to have the car to work.
 
j-mac said:
In most cases I am for the free practice of business, but not in this case. "Payday loans" are loan sharking. And it isn't just the poor that get trapped by them.

When we first moved to SC, my wife took a job working in one of these places for a short time. The stories she would tell are heartbreaking. And in most cases all these people need is a little counseling. When she did that, she got in trouble with her boss.

These places are straight up evil.
Click to expand...

I do not deny that. But the more regulations on interest rates, the more selective they'll be about who to loan to.
 
Lutherf said:
You left out people with gambling issues. There are LOTS of them using these services.
Click to expand...

That may be true, but let's look at things more specifically.

Pew Research in 2012 reported that the majority of payday loan borrowers are 25- to 44-year-old white women, though “there are five groups that have higher odds of having used a payday loan: those without a four-year college degree; home renters; African Americans; those earning below $40,000 annually; and those who are separated or divorced.” (Who Borrows, Where They Borrow, and Why - Pew Center on the States)

So in many cases you already have people who are facing hard times economically and then have no where else to turn to to get money.
 
j-mac said:
At what price? I'm not saying that they aren't a resource for those in dire situations, but they are straight up loan sharks.
Click to expand...

At the price that the people who desperately need the money for a short term are willing to pay.
 
MMC said:
Yep Janfu .....one lady they were talking about this morning on the radio worked two part time jobs. Had bad credit got a loan with 35% interest. Ended up in a crash totaling out the car and had to go and get another loan. Which she ended up having the car repo'ed. Had kids and doctors to deal with too.

Ended up going back to one of these Payday Loans to get another loan. No way out as she had to have the car to work.
Click to expand...

She didn't have insurance on her car?
 
You must log in or register to reply here.
Back
Top Bottom