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Payday Loans

Payday loan offices have been sprouting up across the country for decades. In these hard times, more people than ever are using payday loans to keep bill collectors at bay.



 

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The old mafia guys have got to be rolling over in their graves. Those guys were often put in prison for less than this.

Same feudal system without the allegiances.

Cash Advance Lenders are just supplying a huge demand. If banks wouldn't have ran this country into the ground giving out bad loans for year than more people wouldn't be relying on short term loans to get by. Most states cap the fee that is charge to between $15 - $25 per $100 borrowed and for people that need cash today, it's a small price to pay. The lenders are just providing people with what they want, so if anything they are helping people more than they are hurting people. Try to explain to a mother who got cash to feed her children on why these loans are bad or should be regulated more.

Are you kidding? 15 - 25 on $100? I don't think the problem is them fronting the money - I think the problem is greed. To use your example, just because you have a mother trapped who needs cash to feed her children doesn't mean you have to bleed her.

Have you ever had to ask a friend for money? What about a bank? Finance places are in for the money, and yes it is a business and needs to be profitable. If people want to borrow money without interest then they should ask a family member. Otherwise it's not really fair to say making money is not fair. The fact is that there are way worse of credit options that paying $15 to borrow $100. Try getting a cash advance on a credit card and see what they charge, but obviously they are honorable, right? Or better yet, maybe people that need money should stand out on a corner and beg for it. At least then they wouldn't have to pay it back and have no interest. Is that the alternative for people who need cash and can't get a personal loan? I'd like to hear what you would do for that mother who needs to feed her kids. Make sure to send her money from your check, or help her make a sign to beg for food. I don't think paying $15 to get a cash loan is that unreasonable and if you think so, than maybe you should open your own business and lend money because I think it would be great to have a place that lends out money and doesn't want to make a profit. Actually, they have those right now as well, they are called churches.

I will concede that there is a high risk with payday loans; those likely to take such a loan are likely broke with bad credit.

I also concede a higher interest rate is necessary to remain profitable when dealing with high-risk credit, where the number of defaults is significant.

However, 800% interest is beyond insulting. Furthermore, the "length of loan" argument falls apart when we analyze it. An efficient company to compensate for the shorter loan period by either a) increasing turnover by finding more credit worthy clients and b) ofter reasonable terms for an explicit medium-term loan (i.e. instead of 800% for 2 weeks, pay 15% over 6 months).

Instead, the game is played for blood. Loans are given to those who have nothing for the explicit purpose of overwhelming them the moment they fail to repay. This is absurd; these terms are unreasonable, and the average client is clearly financially ignorant.

I'd have more respect for these loansharks if they just mugged old ladies. At least that has a certain degree of honesty to it.

A few points:

1) I find it ASTOUNDING that Dodd lumped credit cards with mortgages as a "multi-year" debt. Isn't this the same attitude that is ultimately responsible for these payday loan customers in the first place?

2) I'd like to see financial literacy integrated into the curriculum of high schools here in the USA. I don't mean economics and math, I mean a dedicated "financial literacy" program that could cover everything from budgeting, to the power/danger of compound interest, to how to write a resume and interview.

3) I have no love for payday loansharks, but I reject the notion that the government is responsible for stopping this. Illegal loan sharking has existed, and will continue to exist, regardless of the law.

4) Here's a compromise for my left leaning friends: every customer of a payday loan gets 1 (one) "get out of jail free card" vis a vis their own mini-bailout. The only condition is, they must attend a financial literacy course (like a Saturday traffic school, but for money matters). Attend the class, the Feds can pay off the loan. This way the underclass is saved, and more importantly, learns from the mistake. Meanwhile we save money on worthless regulators, and these loan scumbags keep their jobs, so we can get some tax revenue to pay for all this.

However, 800% interest is beyond insulting. Furthermore, the "length of loan" argument falls apart when we analyze it. An efficient company to compensate for the shorter loan period by either a) increasing turnover by finding more credit worthy clients and b) ofter reasonable terms for an explicit medium-term loan. David From PayDay Loans

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