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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
SouthernDemocrat said:
And statistically 80% of those loans get rolled over well past the 14 days. CFPB Finds Four Out Of Five Payday Loans Are Rolled Over Or Renewed > Newsroom > Consumer Financial Protection Bureau

Those that utilize payday lenders routinely roll over loans and stay in debt as much as 11 months. Its not uncommon for their fees to exceed the amount borrowed. If we are going to allow payday lenders why not just say to hell with it and legalize loan sharks.
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Then they're idiots. If you want to regulate and make that impossible, fine by me. However, you're looking at it entirely wrong. It isn't a single 24-week loan, it's 12 2-week loans. Each loan is separate and needs to be considered that way. It is blatantly dishonest to consider all of these the same loan and run them together, just because they happen consecutively.
 
Cephus said:
Then they're idiots. If you want to regulate and make that impossible, fine by me. However, you're looking at it entirely wrong. It isn't a single 24-week loan, it's 12 2-week loans. Each loan is separate and needs to be considered that way. It is blatantly dishonest to consider all of these the same loan and run them together, just because they happen consecutively.
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Its a rollover, they pay the interest and just roll over the loan. Its like a revolving credit card with an APR in the triple digits. Moreover its how those payday lenders make their money, they depend upon borrowers rolling over again and again and again.
 
SouthernDemocrat said:
Its a rollover, they pay the interest and just roll over the loan. Its like a revolving credit card with an APR in the triple digits. Moreover its how those payday lenders make their money, they depend upon borrowers rolling over again and again and again.
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However, it is treated just like a new loan. They give you the interest, the old loan is closed out, a new loan is generated and another 2-week timer is started. It can only be a rollover if it remains the same loan, which it never does. Try again.
 
tres borrachos said:
For people with bad credit, no collateral, needing money in an emergency, they serve a purpose.
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It's hard not to be judgemental but arent most people that use these places in this position because they already did all this spending and not paying back and getting in deeper and deeper? This only seems like more of the same, not an 'alternative' to a bank. Not all of course, sometimes people really get into a scrape or emergency.

But they do seem beyond 'doing business' and more predatory.
 
tres borrachos said:
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.
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Cant they just go to more than one lender to get more $$?
 
Lending small sums of money at exorbitant interest rates for short periods of time was once considered a social problem requiring the solution of usury and small loan laws. However, payday lenders have persuaded nineteen states to legalize triple digit interest short-term lending and are pressing the remaining states to make payday loans legitimate.

Payday lending has exploded in the last few years. Colorado is one of the few states with an industry-wide annual report available. For 1997, the Attorney General reported that 188 lenders made 374,477 post-dated check loans totaling $42,823,089. The average annual percentage rate charged on these loans was 485.26%. The average term for loans was 16.58 days. Over 58,000 of these loans, or 15.5%, were refinanced. For the year ended 12/31/97, Washington reported 562,031 loans made by check cashers. These loans were for a total of $144,923,986. The average size loan was $255. Lenders collected $21,541,338 in fees and charged off $2,054,338. Indiana reports that the number of payday lenders jumped from 11 in 1995 to 59 in 1997, with loan volume increasing from $12,688,599 in 1995 to $98 million in 1997.

DFI: A Report on the Payday Loan Industry
 
I was forced to take out a payday loan once. I borrowed $200, Had to pay back $421. I learned, never again. They kept sending me options to roll over, yada yada, No way. They are skummy, but I learned.
 
Cephus said:
However, it is treated just like a new loan. They give you the interest, the old loan is closed out, a new loan is generated and another 2-week timer is started. It can only be a rollover if it remains the same loan, which it never does. Try again.
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The industry calls them rollovers. Moreover, you are engaging in a purely semantics argument. What difference does it make whether its technically a new loan or not as the interest and fees accumulate just the same.
 
SouthernDemocrat said:
The industry calls them rollovers. Moreover, you are engaging in a purely semantics argument. What difference does it make whether its technically a new loan or not as the interest and fees accumulate just the same.
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But they do not accumulate. The fees don't get higher and higher, they must be paid every 2 weeks in order to get the "rollover". You need to walk your butt into that office every two weeks with cash in hand and sign a completely new agreement to keep doing that. I don't care what they call them, I care that there are 26 entirely separate signed agreements a year, not just one.
 
Cephus said:
However, it is treated just like a new loan. They give you the interest, the old loan is closed out, a new loan is generated and another 2-week timer is started. It can only be a rollover if it remains the same loan, which it never does. Try again.
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Or like paying "the vig" to a loan shark
 
j-mac said:
No. You can only have 1 at a time
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Hardly. There isn't a national database of payday loans, at least not that I know of. Sure, the agreement asks if you have any loans outstanding elsewhere. All you have to do is say no. There's no way of telling if you have 100 of them out or not.
 
j-mac said:
No. You can only have 1 at a time
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Interesting...the payday loan places check to see if you have gone to other places?

Edit: neva mind...saw Cephus's post.
 
Cephus said:
Hardly. There isn't a national database of payday loans, at least not that I know of. Sure, the agreement asks if you have any loans outstanding elsewhere. All you have to do is say no. There's no way of telling if you have 100 of them out or not.
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Don't the credit reporting agencies hear about it when you take out a loan?
 
DifferentDrummr said:
Don't the credit reporting agencies hear about it when you take out a loan?
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Not as far as I know. Besides, none of these companies pull credit reports, that's their big selling point, no credit required.
 
Lursa said:
It's hard not to be judgemental but arent most people that use these places in this position because they already did all this spending and not paying back and getting in deeper and deeper? This only seems like more of the same, not an 'alternative' to a bank. Not all of course, sometimes people really get into a scrape or emergency.

But they do seem beyond 'doing business' and more predatory.
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The only people that use payday lenders are people who can't get credit anywhere else. Yes, they should not be taking a loan anywhere but if they need $500 to fix the car, and won't have that until next payday, that's where they have to go.

It is an alternative to a bank, if it's the only place you can borrow money until payday. If I was ever in that position (doG forbid) I'd borrow from a friend or a relative, or sell some silver or jewelry, before I went to one of those lenders, but not everyone can do that.
 
Cephus said:
Not as far as I know. Besides, none of these companies pull credit reports, that's their big selling point, no credit required.
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Correct - and they don't report to the agencies either. Some of them do check credit but not many.
 
gdgyva said:
tres

are you responding to me, or to him?

i am very aware of the lending laws...i live them on a daily basis

everyone of my managers has to go through additional training every three years, to make sure we stay within all rules and regulations of the truth and lending laws

he was arguing that my calculation of over 300% was idiotic, because it was only a short term loan

what he failed to comprehend, is that the every loan...no matter the amount, time, or type is regulated....and all have to include disclosures of interest paid on an ANNUAL BASIS
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Your managers only have to go through training once every 3 years to stay within regulations and Truth In Lending (not truth and lending)? Not going to ask you what business you're in, but any lender has to stay on top of regulations every day - and the lending laws have changed multiple times in the last 3 years. Every lender has to have a compliance officer as well as a risk officer to ensure all federal and state regulations are being followed always.
 
SouthernDemocrat said:
Its a rollover, they pay the interest and just roll over the loan. Its like a revolving credit card with an APR in the triple digits. Moreover its how those payday lenders make their money, they depend upon borrowers rolling over again and again and again.
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The borrower has to sign a new agreement. Payday loans aren't evergreen loans.
 
SouthernDemocrat said:
Then why not just legalize loan sharks then?
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Rhetorical question? I don't know. The government is the one who made loan sharks illegal, I think.

I'm sure most people would rather go to a lender that has some semblance of decorum than Vinnie and his boys. I never heard of payday lenders breaking kneecaps or leaving horse heads in beds when the debt wasn't paid.
 
tres borrachos said:
Correct - and they don't report to the agencies either. Some of them do check credit but not many.
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Anyone who had decent credit wouldn't be at these places in the first place, they'd go to an actual bank or credit union and get a loan.
 
tres borrachos said:
Rhetorical question? I don't know. The government is the one who made loan sharks illegal, I think.

I'm sure most people would rather go to a lender that has some semblance of decorum than Vinnie and his boys. I never heard of payday lenders breaking kneecaps or leaving horse heads in beds when the debt wasn't paid.
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Loan sharks are not regulated, nor do they operate within the law, that's why they're illegal. Payday loans are regulated and they do operate within the law. It's too bad some people are so blinded by their agenda to tell the difference.
 
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