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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
In my country there is. Like most terms and conditions trained solicitors can't make head nor tale of them. As I have said in my country, which I took pains to make the distinction that I was comparing the UKs pay day lenders which you clearly missed there is no truth in lending laws, whatever the hell that is. There is life outside of the USA bub.

Its nice of you to assume that by having a police force the population is to stupid to protect themselves, by having any regulation ever and having government at all means you basically think that the population is stupid and idiotic. Fantastic logic...no wait there is no logic there at all.

But we aren't talking about your country.
 
Generalizing all who use these predators?

You have. Your issue with the lenders is that they're "predators". Which means you've decided that nobody is responsible enough not to protect themselves against these "predators".

And you haven't made any compelling argument to regulate them any more than they already are regulated except to say "they're predators!".
 
You have. Your issue with the lenders is that they're "predators". Which means you've decided that nobody is responsible enough not to protect themselves against these "predators".

And you haven't made any compelling argument to regulate them any more than they already are regulated except to say "they're predators!".

Good point. The argument I put forwards is the high fees for short term loans, that are often rolled over with the same fees as part of the renewal. Perhaps lengthening the base model from 2 weeks to a sustanable period to pay back the loan would be a good step.
 
But we aren't talking about your country.

But the principal of regulation is not a wrong one. Just because someone could avoid it if they wanted to. By that logic no regulation should exist ever.

And quite often it is to prey upon the desperate who are not making logical choices or are not educated enough and it ends up spiralling them into a circle of huge debt, where one small debt turns into a big unaffordable one. That is predatory.

Its a question of are you happy to have a section of society be preyed upon by companies set up and designed to do just that, its their raison d'etre, and if that is legal then why not just allow loan sharks? And if they kill a few well hell they are to stupid to exist anyway right?
 
You have. Your issue with the lenders is that they're "predators". Which means you've decided that nobody is responsible enough not to protect themselves against these "predators".

And you haven't made any compelling argument to regulate them any more than they already are regulated except to say "they're predators!".

Stop pretending that there aren't lending practices that nearly everyone with a financial background identifies as predatory. It's simply dishonest.

You should already know this: Predatory lending - Wikipedia, the free encyclopedia
 
Morning Cephus....Really? I don't recall seeing my name in the OP...All I am doing is debating on a message board about a business that I feel is highly unethical. I don't see where that means that I personally have to have the entire solution worked out...

But you're complaining in this thread that the payday loan industry needs to be stopped from "abusing" people. Therefore, you have to have a better solution. Let's hear it. If all of these stores were to vanish tomorrow, what then? The people using them still need the money. How do you propose they get it? Liberal whiners, I understand, they just want the government to pass out even more checks so they can buy votes. What's your excuse?

But, I will say I do agree with some of the points that you and Tres lay out, they are valid...Such as no one forcing these people to take out the loans...That is a good point and I am hesitant to get into the business of 'saving people from themselves', however, I just don't like these places...

Who cares what you like? If this is just some kind of emotional reaction, you're doing it wrong. You need to identify a real problem and come up with a real solution. So far, you've done neither. You just don't like it. Too bad.

"People who use payday loans are struggling financially, and they usually have trouble covering ordinary livingexpenses from month to month. Most are paying bank overdraft fees, most carry credit card or other debt, andalmost all have credit scores that are at the lowest end of the scale.

Of course they are struggling financially, that's why they need the money! These people are financially irresponsible, that's why they're in the mess that they're in. Now while, in a perfect world, they'd just clean up their lives and live within their means, we know that's not going to happen in the short term, not unless you have a magic wand you've been keeping secret. For all of the "should be" wishful thinking we come up with, the fact is, these people have no other options and you want to take away the only option they have because you "don't like it".

Policy discussion in recent years has focusedon whether payday loan customers need more access to credit, and what rate of interest is appropriate for such loans. These are valid questions, but there is insufficient evidence to know whether consumers are better off with or without access to high-interest loans (even if the loans have affordable payments).

They had access to credit, they ruined it. They bounced checks. They didn't pay back loans. They ignored credit card payments. What makes you think that, if given the chance again, they wouldn't do the exact same thing again? Interest rates are based on risk and these people, because of their own actions, are extremely risky. They get high rates of interest because they EARN high rates of interest. It is a massive risk to place every single dollar in their hands. Anyone who doesn't understand that doesn't get basic economics.

There is, however, sufficient evidence to conclude that conventional lump-sum payday loans harm consumers compared with loans that have affordable payments. It is clear that the lump-sum payday loan has inherent structural flaws that make it unaffordable and dangerous for consumers, and that new policies to eliminate this failed product are warranted."

They don't qualify for loans with affordable payments, that's why they're getting payday loans. They default on even these loans with great regularity, yet now you want to give them something better that they will equally default on? Are you crazy?

that's debatable...Many, in fact I would say most don't fully understand how to budget, and spend day to day, therefore, understanding the long term effect on their bills is not too much of a thought at the time of taking out these products.

I know they don't understand these things, that's why they're in the situation they're in. Unless you want to mandate financial training for all of them, and who is going to pay for that, then I don't see where you're going to fix the problem. I know that the place I helped set up, we had a referral to low-cost financial counseling that virtually nobody ever took advantage of. They not only don't know how to do it, they don't care to learn.

that is true, and I am conflicted about my own position on this, but in the end I stand on ethical practices, and this industry is void of ethics. I know first hand.

Apparently not because I know first hand that it isn't. There may absolutely be some fraud, just like there is in the pawn shop industry, but that doesn't make the whole industry rife with fraud. Maybe you need some better experience.
 
cont.

All I can say is that if I were ever in that position (again) I would hope that someone would help me ward against people, con men really, out to drop the anvil on my head...

You're the one who chose to go there without researching. You're the one who apparently didn't keep up your end of the bargain. Now you're blaming the industry for your own failures? Seriously?

Are you in the business Cephus? I just wonder. Because, although my arguments in here are often on the political right because I am a believer in personal responsibility, but, and this is about the only but, when I see clear advantage being cast on one group of people with little resource to correct the problem, I think it is a horribly unethical thing to do....But, I do want to say that I don't have good answers on how to fix it, I just know that it is destructive.

No, but I did set up a payday advance place, I have seen the industry from the inside, I have dealt directly with many customers who come to such places and not a single one ever gets into it unknowingly. There is a distinct code of ethics in place, at least in my experience, but you have to deal with the realities. For every customer who comes in and rolls over a loan, the choice is between rolling it over and having the customer go into default and just not pay it back at all. It is a lie, at least in my experience, that payday places push customers to roll over loans. They do not. It's a matter of desperation, not of business design. The fact is, once the client has your money in hand, they have all of the power. There is virtually no legal recourse because these people have no money. Suing them is going to be an automatic victory for the store owner. Collecting on that judgement is virtually impossible. Again, what is your solution? You have none. You've just got an emotional grudge and that's no way to run public policy.
 
cont.



You're the one who chose to go there without researching. You're the one who apparently didn't keep up your end of the bargain. Now you're blaming the industry for your own failures? Seriously?



No, but I did set up a payday advance place, I have seen the industry from the inside, I have dealt directly with many customers who come to such places and not a single one ever gets into it unknowingly. There is a distinct code of ethics in place, at least in my experience, but you have to deal with the realities. For every customer who comes in and rolls over a loan, the choice is between rolling it over and having the customer go into default and just not pay it back at all. It is a lie, at least in my experience, that payday places push customers to roll over loans. They do not. It's a matter of desperation, not of business design. The fact is, once the client has your money in hand, they have all of the power. There is virtually no legal recourse because these people have no money. Suing them is going to be an automatic victory for the store owner. Collecting on that judgement is virtually impossible. Again, what is your solution? You have none. You've just got an emotional grudge and that's no way to run public policy.
That's right Cephus, at one time in my life I was pretty irresponsible with money. I didn't make enough and made poor decisions with credit, along with being young and partying too much. That took us into bankruptcy. We lost everything.

Since, I was at least smart enough to get the counsel of a family member that woke me up, and after some real pain and ten years we built back up to a 750+ score and own a home and have savings.

Not everyone has that family to fall back on. Nor, do they wake the hell up. All I can tell you is my experience. No one ever offered the option to pay back the loan in three payments, and they absolutey did consistently offer roll over to distressed situations. I didn't find out about extended payback until my wife worked at one.

So, you helpwd set one up. I hope you made a handsome profit.

Now you can continue to attack me personally, or we can have a conversation. Which is it?
 
That's right Cephus, at one time in my life I was pretty irresponsible with money. I didn't make enough and made poor decisions with credit, along with being young and partying too much. That took us into bankruptcy. We lost everything.

That's a shame. People make mistakes. People also need to be responsible for fixing those mistakes. That's what conservatism is all about: personal responsibility. It's a shame how many people don't understand that.

Since, I was at least smart enough to get the counsel of a family member that woke me up, and after some real pain and ten years we built back up to a 750+ score and own a home and have savings.

There are plenty of people out there who can counsel you, it doesn't have to be family. In the low income areas, there are plenty of free-of-charge credit counseling places available that people can utilize if they wish. If they don't, it's their own fault. Personal responsibility.

Not everyone has that family to fall back on. Nor, do they wake the hell up. All I can tell you is my experience. No one ever offered the option to pay back the loan in three payments, and they absolutey did consistently offer roll over to distressed situations. I didn't find out about extended payback until my wife worked at one.

Which doesn't matter, there are plenty of options. And your experience doesn't mean a damn thing when it comes to overall reality. What happened to you, happened to you. You got out of it. It was your job to get out of it. Personal responsibility. What it seems is that you're assuming that people are too stupid to get out of things on their own or to figure out how to fix their own problems, with or without help. That's entirely defeatist and antithetical to the conservative philosophy. Just because you had a particular experience doesn't mean that all experiences are the same. You're making assumptions about a nationwide industry based on a single experience you had a long time ago.

So, you helpwd set one up. I hope you made a handsome profit.

Nope, in fact these places make very little profit. I got paid a consulting fee, nothing more.

Now you can continue to attack me personally, or we can have a conversation. Which is it?

Nobody is attacking you personally, I'm pointing out that you are acting in a very non-conservative manner, demanding that the state fix problems that you perceive, yet cannot demonstrate actually happen. You are basing it all on a single personal experience and are reacting entirely emotionally. Then you're taking all questions as personal attacks. That is not rational. It is not possible to have a valid discussion with irrational people. So make up your mind, are you just going to react, or are you going to think too?
 
That's a shame. People make mistakes. People also need to be responsible for fixing those mistakes. That's what conservatism is all about: personal responsibility.

No longer true (if it ever was). Today's self-styled conservatives believe that personal responsibility is for everyone but themselves. Their actions speak far louder than your words.

Did any conservatives make a peep when the heads of the nation's banks and corporations testified about their role in the 2008 collapse and said "mistakes were made," without naming anything for which they were personally at fault?
 
That's a shame. People make mistakes. People also need to be responsible for fixing those mistakes. That's what conservatism is all about: personal responsibility. It's a shame how many people don't understand that.

Absolutely. I agree with that 100%

There are plenty of people out there who can counsel you, it doesn't have to be family. In the low income areas, there are plenty of free-of-charge credit counseling places available that people can utilize if they wish. If they don't, it's their own fault. Personal responsibility.

There are many fraudulent counseling services out there as well...Consider this from the MN atty Gen.

"There are many fraudulent companies seeking to exploit the fact that many consumers are having a difficult time with credit card bills. These companies make unsolicited phone calls to consumers promising to help lower their interest rates or find them better deals. The companies often require the consumer to pay high up-front fees of as much as $2,000 or more. Once the consumer pays the money, however, the companies often fail to deliver the promised services. The end result: the consumer now is $2,000 more in the hole. Remember: there is no easy way to lower your interest rates or get out of debt. Beware of companies that call you up and promise they have “insider secrets” on how to lower your credit card interest rates."

Debt Assistance Scams | The Office of Attorney General Lori Swanson

Ultimately, after the person is dug further into the hole, they hopefully realize as I did that it is up to them to get out of that hole. Often the only recourse is filing bankruptcy. So, is that a good thing? There were almost a million filings in 2014, what effect does that have on our economy?

http://www.uscourts.gov/uscourts/Statistics/BankruptcyStatistics/BankruptcyFilings/2014/1214_f2.pdf

Which doesn't matter, there are plenty of options. And your experience doesn't mean a damn thing when it comes to overall reality. What happened to you, happened to you. You got out of it. It was your job to get out of it. Personal responsibility. What it seems is that you're assuming that people are too stupid to get out of things on their own or to figure out how to fix their own problems, with or without help. That's entirely defeatist and antithetical to the conservative philosophy. Just because you had a particular experience doesn't mean that all experiences are the same. You're making assumptions about a nationwide industry based on a single experience you had a long time ago.

Yep, what happened to me was my fault, and thankfully I was able to dig back out. Many don't. And It may be defeatist, as you say, but numbers don't lie, and a million bankruptcy's in 2014 tell the story. That you think I can't be a conservative, and see an unethical business model and speak out against it I am sure you will say is not attacking me personally, but I am equally sure you aren't speaking to those that agree with you on this topic with questioning their conservative creds...But you are right about one thing, MY experience isn't the same as others...Many others are worse. And I am not making assumptions anymore than you are...You consulted on an advance place, my wife worked for one....Problem is, you discount my experience with these places coming from the position of a paid advocate of these places....I gave you PEW, you give me derision.

Nope, in fact these places make very little profit. I got paid a consulting fee, nothing more.

You're right....I looked it up, many places make between 5% and 13%....Not outrageous....

Nobody is attacking you personally, I'm pointing out that you are acting in a very non-conservative manner, demanding that the state fix problems that you perceive, yet cannot demonstrate actually happen.

I have said in this thread from the start that I realize that taking the stance on Payday lenders as I do, will not win me conservative points. I try to look at things individually in here. You should do the same....I am pretty sure though that telling me that I am acting in "a very non conservative manner'' is the definition of attacking me, instead of addressing my argument with facts...I've provided you several links pointing to my argument, what have you given me? I don't see a single link from you.

You are basing it all on a single personal experience and are reacting entirely emotionally.

Nope...How many times do I have to tell you that my wife worked for one for you to stop deflecting?

Then you're taking all questions as personal attacks.

Not all of them, just the ones that are.

That is not rational. It is not possible to have a valid discussion with irrational people. So make up your mind, are you just going to react, or are you going to think too?

Like that.
 
No longer true (if it ever was). Today's self-styled conservatives believe that personal responsibility is for everyone but themselves. Their actions speak far louder than your words.

Did any conservatives make a peep when the heads of the nation's banks and corporations testified about their role in the 2008 collapse and said "mistakes were made," without naming anything for which they were personally at fault?

Yep, plenty....
 
For people with bad credit, no collateral, needing money in an emergency, they serve a purpose.

True. I don't see a need to abolish them but the 400% plus interest rates need to be put to check.
 
True. I don't see a need to abolish them but the 400% plus interest rates need to be put to check.

Morning Rob...I think to be fair, Tres, and Cephus make a fair point that the original loan typically for a two week period is written for interest of $15 per $100 borrowed, So in a monthly model assuming that the original $100 is rolled over one time, that would equal an interest rate of 30% on that $100. Not horrible for someone with destroyed credit to get money lent to them. However, where I have a problem, is with the qualification process, and with the disclosure on how to get out of the loan. Also, I don't any longer think that abolishing this type of service to poor communities is a bad thing, but I do still think that the number of "roll overs" per se needs to be addressed.
 
Morning Rob...I think to be fair, Tres, and Cephus make a fair point that the original loan typically for a two week period is written for interest of $15 per $100 borrowed, So in a monthly model assuming that the original $100 is rolled over one time, that would equal an interest rate of 30% on that $100. Not horrible for someone with destroyed credit to get money lent to them. However, where I have a problem, is with the qualification process, and with the disclosure on how to get out of the loan. Also, I don't any longer think that abolishing this type of service to poor communities is a bad thing, but I do still think that the number of "roll overs" per se needs to be addressed.

Well said.
 
Besides against Fannie and Freddie, please. . . :roll:

Oh, I see...Nah...This is just a game that you can play discounting anything provided that you asked for as "not good enough"....Play it somewhere else.
 
True. I don't see a need to abolish them but the 400% plus interest rates need to be put to check.

what is a reasonable interest rate to make it worthwhile to place cash in the hands of the least financially trustworthy members of our society?
 
what is a reasonable interest rate to make it worthwhile to place cash in the hands of the least financially trustworthy members of our society?

All business incurs a risk. Hard to justify risk for raping the desperate of their future paychecks at 400%. What's reasonable. Dunno. I know that that is clearly unreasonable.
 
what is a reasonable interest rate to make it worthwhile to place cash in the hands of the least financially trustworthy members of our society?

You are classing all in one box. I would say many are the working poor, a sudden expense, car, medical comes up and where can they go.
The ones that do not pay back are not able to use the services, and i would assume reported to some credit agency, which they all use.
To find the default rate, rate of return for the companies, they would need access to their books.
 
You are classing all in one box. I would say many are the working poor, a sudden expense, car, medical comes up and where can they go.
The ones that do not pay back are not able to use the services, and i would assume reported to some credit agency, which they all use.
To find the default rate, rate of return for the companies, they would need access to their books.
here's reality: they are all of one box
that box is labeled 'the most financially risky prospective borrowers who exist'
if they were not so labelled they would have access to alternative credit at a more favorable interest rate
these are signature loans. if they had collateral, they could have pawned those assets for quick cash ... which also indicates these debtors to be judgment-proof
servicing and collecting these payday loans is going to be MUCH more difficult than recovering any less risky portfolio of loans
this pool of borrowers has already demonstrated that they are a huge risk as debtors
causing the cost of servicing/collecting those outstanding debts to be very expensive
and the charge offs, where recovery is found not to be cost effective, is also going to be enormous when compared to any other group of borrowers
so, the lender will eat a substantial portion of the principal loaned in aggregate, and will incur high labor costs to collect those accounts that are recoverable
there is no way that someone would expose their cash to such high risk lending unless they were also going to generate a high rate of interest of offset the very high costs of such lending
 
All business incurs a risk. Hard to justify risk for raping the desperate of their future paychecks at 400%. What's reasonable. Dunno. I know that that is clearly unreasonable.

not one payday lender i am aware of has gone out and forced their money upon these high risk borrowers who have no other alternative source of borrowed funds
those debtors have obligated themselves knowing they are going to have to repay an extraordinary amount of interest
but despite knowing this they borrow. many of them repeatedly

so, if you were to put your personal funds at risk within this clientele, what rate of interest would you command to make such loans?
 
here's reality: they are all of one box
that box is labeled 'the most financially risky prospective borrowers who exist'
if they were not so labelled they would have access to alternative credit at a more favorable interest rate
these are signature loans. if they had collateral, they could have pawned those assets for quick cash ... which also indicates these debtors to be judgment-proof
servicing and collecting these payday loans is going to be MUCH more difficult than recovering any less risky portfolio of loans
this pool of borrowers has already demonstrated that they are a huge risk as debtors
causing the cost of servicing/collecting those outstanding debts to be very expensive
and the charge offs, where recovery is found not to be cost effective, is also going to be enormous when compared to any other group of borrowers
so, the lender will eat a substantial portion of the principal loaned in aggregate, and will incur high labor costs to collect those accounts that are recoverable
there is no way that someone would expose their cash to such high risk lending unless they were also going to generate a high rate of interest of offset the very high costs of such lending

Ok, then there should be no problem in leaving the lenders alone, but rather restricting the times that the borrowers can use the service.
 
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