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View Diary: Predatory lenders prey on service members (22 comments)

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  •  Well, the problem comes in defining (0+ / 0-)

    "excessive". An interest rate of over 20% sounds excessive when the prime rate is 3%. But payday lenders, since they lend tiny amounts that they lend for very short periods (but have fixed costs), may have to charge $10 to give you an $80 advance on your paycheck for a week (for example). The implied interest rate looks like it is over 500%. But what really is happening is a small business (payday lenders are mostly small businesses) is charging $10 to someone for the convenience of getting their $80 a week early. The payday lending industry, for all this talk of predatory lending, are used over and over again by people who from time to time have a cash crunch. If an adult American wishes to pay a high interest rate for a tiny, short-term loan, I don't see how we justify telling them they are no longer allowed to.

    •  Payday lenders are not... (4+ / 0-)
      Recommended by:
      lyvwyr101, Mortifyd, The Marti, burlydee

      ...small businesses. They are large companies that make their money off charging absurd interest rates.

      "Republicans only care about the rich" - My late Father (-8.25, -7.85)

      by Mark E Andersen on Fri May 17, 2013 at 03:51:00 PM PDT

      [ Parent ]

    •  There are other business models. (1+ / 0-)
      Recommended by:
      The Marti
      (but have fixed costs), may have to charge $10 to give you an $80 advance on your paycheck for a week (for example).
      One question is why the payday lenders have those fixed costs in the first place.  Certainly the short duration has something to do with it, but it's not at all clear that is a determinative requirement.

      Given that many clients are repeat clients, it might make sense to move to more of a credit card model.  Pre-clear the borrower for a given small amount, and cut out the origination expense on every loan.

      There's no reason why any business model has to have high overhead.  Cut the overhead to the minimum necessary.

      -7.75 -4.67

      "Freedom's just another word for nothing left to lose."

      There are no Christians in foxholes.

      by Odysseus on Fri May 17, 2013 at 07:08:51 PM PDT

      [ Parent ]

      •  Everyone here things it is oh so easy (1+ / 0-)
        Recommended by:
        Odysseus

        to run a lending business in which the borrower is charged much less. Yet not one person ever says "hey, I think I'll actually do this." If it were so easy, somebody would do it. But while saying in a blog that every lender is greedy IS easy, actually doing better than them, for some reason, is apparently impossible. Just once, instead of endless griping, I'd like to hear someone here actually do something they think is so simple.

        •  You realize... (1+ / 0-)
          Recommended by:
          ruleoflaw

          ...that you are standing up for parasites right? The people that own and run these places are scum.

          Want to know why most people would never open a payday lending store? It isn't because it is difficult or hard, it is because most of us have a conscience.

          "Republicans only care about the rich" - My late Father (-8.25, -7.85)

          by Mark E Andersen on Sat May 18, 2013 at 04:02:54 AM PDT

          [ Parent ]

          •  Instead of actually having facts, (0+ / 0-)

            all you have said here is that these people are scum and parasites and predators that charge much too much for their services. You don't seem  to even want to try to discuss the facts of the business, or explain why you don't take the opportunity to run the first ever low-cost payday lender. You'd help so many people, and make a lot of money yourself, so why not? Could it be that it is all just bullshit?

            •  Ahhh...there you go... (0+ / 0-)

              You don't like my argument and now demand facts (which are surprisingly in the diary and links I posted).

              How about this, you write a fact supported diary about how good these fine upstanding citizens are for the economy and especially how the poor benefit from their services - then I we can talk. (My guess is though you can't do it and won't do it because the facts will not support your case).

              "Republicans only care about the rich" - My late Father (-8.25, -7.85)

              by Mark E Andersen on Sat May 18, 2013 at 04:25:02 PM PDT

              [ Parent ]

            •  Also... (1+ / 0-)
              Recommended by:
              Sand Hill Crane

              ...fine upstanding citizens charge interest rates of 400% and don't disclose it, or write up a contract for a title loan that actually states that you are selling your car to them for $5000 and will buy it back at a later date for $10,000...yep, fine upstanding citizens those folks are.

              Take your libertarian, Mad Max, everyone for himself worldview somewhere else. I don't want to live in your petty self-centered world where the answer to poor people not being able to get small loans is to charge unjustifiable interest rates (You can say cost of business all you want, doesn't make it true). They prey on the poor...period.

              You want facts here you go:
              http://www.predatorylendingassociation.com/ (Satire but you should get the point)

              http://finance.yahoo.com/...

              http://portal.hud.gov/...

              http://www.fdicoig.gov/...

               

              "Republicans only care about the rich" - My late Father (-8.25, -7.85)

              by Mark E Andersen on Sat May 18, 2013 at 04:39:39 PM PDT

              [ Parent ]

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