Author Topic: 6 Outrageous Facts That Show How Payday Lenders Screw Consumers  (Read 27216 times)

SeattleSun

  • Full Member
  • ***
  • Posts: 217
    • View Profile
6 Outrageous Facts That Show How Payday Lenders Screw Consumers
« on: October 25, 2013, 07:32:31 PM »
FYI

We've compiled some of the most shocking facts about the payday loan industry from the Milken Institute report  http://www.milkeninstitute.org/pdf/PaydayLenders.pdf     below:

In the U.S., 12 million people borrow nearly $50 billion a year through payday loans.

The rates charged on payday loans can be up to 35 times those charged on credit card loans and 80 times the rates charged on home mortgages and auto loans.

Most borrowers owe payday lenders for five months out of the year and typically end up paying $800 for a $300 loan.

The estimated annual percentage rate on payday loans in the U.S. ranges from a low of 196% in Minnesota to a high of 574% in both Mississippi and Wisconsin.

Borrowers with six or more loans each year make up more than half of all payday revenues in California, and they end up paying at least $525 for a $255 loan.

Payday loan stores tend to aggregate in areas with higher rates of poverty. The six counties in California with the highest number of payday lender stores per 100,000 people have an average per capita income of between $17,986 and $26,300, compared to the statewide average of $44,980. The average unemployment rate among those counties is nearly 15.8% compared to the state average of 11.8% and one in five people lives in poverty compared to 15% nationally.

Read more: http://www.businessinsider.com/outrageous-facts-about-payday-loans-2013-10#ixzz2imOugXJO
« Last Edit: October 25, 2013, 07:40:10 PM by SeattleSun »

Rob L

  • Hero Member
  • *****
  • Posts: 2131
    • View Profile
Re: 6 Outrageous Facts That Show How Payday Lenders Screw Consumers
« Reply #1 on: October 25, 2013, 09:47:48 PM »
I've posted this before, but Michael Milken was railroaded into a plea, served in prison, and lives with a bad rep he doesn't deserve. I'm convinced he committed no crimes, and was brought down by lesser men with political agendas. Our world is a much better place for his having been in it. My view isn't typical or popular and I don't care. Thanks for the interesting piece from the Milken Institute.

DanB

  • Hero Member
  • *****
  • Posts: 665
  • A lie told often enough becomes The Truth!
    • View Profile
Re: 6 Outrageous Facts That Show How Payday Lenders Screw Consumers
« Reply #2 on: October 26, 2013, 03:02:54 AM »
I've posted this before, but Michael Milken was railroaded into a plea, served in prison, and lives with a bad rep he doesn't deserve. I'm convinced he committed no crimes, and was brought down by lesser men with political agendas. Our world is a much better place for his having been in it. My view isn't typical or popular and I don't care. Thanks for the interesting piece from the Milken Institute.

You sir are correct.

dontvote

  • Full Member
  • ***
  • Posts: 226
    • View Profile
    • Email
Re: 6 Outrageous Facts That Show How Payday Lenders Screw Consumers
« Reply #3 on: October 27, 2013, 05:39:35 PM »
Milken's history is a bit more complicated. Some of the things he did are now illegal and nobody would argue that he didn't push the envelope of the market he basically invented/developed (junk bonds). He ignored and humiliated regulators and encouraged or allowed his subordinates to actually break rules.

However, aren't you supposed to wait until someone smears Milken to defend him?
dontvote

Interest Radar IRR: 46.11%
NSR ROI: 41.22%
Average Loan Age: Your Moms

neals384

  • Full Member
  • ***
  • Posts: 113
    • View Profile
Re: 6 Outrageous Facts That Show How Payday Lenders Screw Consumers
« Reply #4 on: October 28, 2013, 11:14:57 AM »
What people don't seem to realize is that any brick and mortar business must price its products and services high enough to cover cost of the physical plant and the labor to run it.  A drive-thru coffee shop charges $2.00 or more for a 25c cup of coffee in order to cover expenses and still make a profit.  Yet no one write inflammatory articles claiming they are screwing their customers.

PayDay lenders have the same overhead as other brick and mortar businesses, except that they also have significant bad-debt losses.  It's as if every 3rd or 4th customer drove away without paying for that coffee.

Of course, it is troubling that PayDay customers are almost all poor to begin with, and in the long run, PayDay loans aren't going to solve their money problems.   But PayDay Loan customers clearly see it as a worthwhile service.

Disclosure:  I have a friend who used to manage a PayDay Lending store.  In addition to originating loans, he would spend a large portion of each day doing collections - which was essential for his store make its numbers.  So he needed to be proficient at collections and up-to-date on legal collections methods on top of everything else.

core

  • Hero Member
  • *****
  • Posts: 1790
  • Your loss is my gain
    • View Profile
Re: 6 Outrageous Facts That Show How Payday Lenders Screw Consumers
« Reply #5 on: October 28, 2013, 12:00:33 PM »
I don't see how charging 574% interest is "screwing consumers".  It doesn't even matter what the default rate is or what brick-and-mortar overhead is.  That has absolutely nothing to do with it because until the socialists control this country, you don't get to decide what a fair price is.  The customers do.  The interest rate is posted right on the wall in large font.  It's on the document you signed.  You walked in there and freely made the decision to pay that price.

If you need some more money to cover bills then get off your butt and get another job for a few weeks.  Strap on a leaf blower and blow some leaves.  (Rich people are afraid of leaves.)  Deliver some pizzas.  Stop putting your paycheck up your nose.  If the matter is so urgent that you cannot wait, then go right in there and get the loan, but don't whine about your own decision.

And yes, I have taken out several payday loans in my younger more irresponsible days.  I do have experience in the matter.

If you don't like Walmart selling Chinese goods don't shop there
If you're against Nike's abusive overseas labor practices don't wear the shoes
If you're against toys in McHappy Meals go somewhere else
If the grass in my yard is too long for you don't look at it

But oh no, none of that is good enough anymore.  In the last couple decades now everybody has to go on a crusade trying to dictate to others how to be righteous and how they can and cannot live their own lives.  Whatever happened to 'Mind your own freaking business'?  Has anyone really said that lately??

New Jersey Guy

  • Hero Member
  • *****
  • Posts: 914
  • Hell Yea it's a Hemi!
    • View Profile
    • Email
Re: 6 Outrageous Facts That Show How Payday Lenders Screw Consumers
« Reply #6 on: October 28, 2013, 12:17:43 PM »
Holy Smokes Core!  Who peed in your Cheerios this morning!
Return over deposits:   66.82%
IRR:   86.54%
As of April 30, 2014

core

  • Hero Member
  • *****
  • Posts: 1790
  • Your loss is my gain
    • View Profile
Re: 6 Outrageous Facts That Show How Payday Lenders Screw Consumers
« Reply #7 on: October 28, 2013, 12:24:32 PM »
Holy Smokes Core!  Who peed in your Cheerios this morning!

Some hippie socialist who says I can't buy day-old bread (destined for the dumpster) to feed the deer out here because I might turn around and sell it to poor people instead.  Yeah, at 89 cents a loaf that would be a real good racket huh.

yojoakak

  • Hero Member
  • *****
  • Posts: 763
    • View Profile
    • Check out my Greasemonkey/Tampermonkey script for LendingClub here
    • Email
Re: 6 Outrageous Facts That Show How Payday Lenders Screw Consumers
« Reply #8 on: October 28, 2013, 12:42:07 PM »
Some hippie socialist who says I can't buy day-old bread (destined for the dumpster) to feed the deer out here because I might turn around and sell it to poor people instead.  Yeah, at 89 cents a loaf that would be a real good racket huh.

They don't want you to buy the bread?

Or they don't want you to feed the deer?

Cause honestly I can't imagine a "hippie socialist" having a problem with either of those.

core

  • Hero Member
  • *****
  • Posts: 1790
  • Your loss is my gain
    • View Profile
Re: 6 Outrageous Facts That Show How Payday Lenders Screw Consumers
« Reply #9 on: October 28, 2013, 01:20:13 PM »
They don't want you to buy the bread?

Correct.  Actually the guy who would have sold it to me wasn't the socialist.  It was the local authority having juristiction (inspector, who knows) who said a bakery owner cannot sell or give away such things.  The reason given was that poor people would be taken advantage of.  This bread is so-called not fit for human consumption, understand.  Once it leaves the store they can't "control" it. 

The real reason for all of this nonsense must be that they want to justify raising my taxes to pay for their darned food stamp programs.  In order to do that they feel they must control the bread.  If a poor person could walk in and get some of this bad bread then that person wouldn't be so dependent on the government.  We can't be having that!

bobeubanks

  • Sr. Member
  • ****
  • Posts: 273
    • View Profile
Re: 6 Outrageous Facts That Show How Payday Lenders Screw Consumers
« Reply #10 on: October 28, 2013, 02:00:31 PM »
In my community the local food bank and churches practically beg people to come get free day old bread. And I live in a blue state.

yojoakak

  • Hero Member
  • *****
  • Posts: 763
    • View Profile
    • Check out my Greasemonkey/Tampermonkey script for LendingClub here
    • Email
Re: 6 Outrageous Facts That Show How Payday Lenders Screw Consumers
« Reply #11 on: October 28, 2013, 02:30:56 PM »
Correct.  Actually the guy who would have sold it to me wasn't the socialist.  It was the local authority having juristiction (inspector, who knows) who said a bakery owner cannot sell or give away such things.  The reason given was that poor people would be taken advantage of.  This bread is so-called not fit for human consumption, understand.  Once it leaves the store they can't "control" it. 

Could it be "the guy who would have sold it" to you just wanted you to buy full price bread?

And used your contempt for "the gub'mint" as a convenient excuse?

http://freegan.info/what-is-a-freegan/freegan-practices/urban-foraging/diving-and-the-law/
http://www.foodtodonate.com/Fdcmain/LegalLiabilities.aspx
« Last Edit: October 28, 2013, 02:33:08 PM by yojoakak »

core

  • Hero Member
  • *****
  • Posts: 1790
  • Your loss is my gain
    • View Profile
Re: 6 Outrageous Facts That Show How Payday Lenders Screw Consumers
« Reply #12 on: October 28, 2013, 02:58:52 PM »
Could it be "the guy who would have sold it" to you just wanted you to buy full price bread?

And used your contempt for "the gub'mint" as a convenient excuse?

Hmmm I think you could be onto something there!  It never even occurred to me that it might be some kind of bakery conspiracy.  The other possibility was I was thinking maybe he just wanted to get rid of me.  It's probably not every day that customers go in there to buy bread wearing guns.  I may just go back in there tomorrow and have a little chat with him.  Thanks for the tip.

New Jersey Guy

  • Hero Member
  • *****
  • Posts: 914
  • Hell Yea it's a Hemi!
    • View Profile
    • Email
Re: 6 Outrageous Facts That Show How Payday Lenders Screw Consumers
« Reply #13 on: October 28, 2013, 03:31:49 PM »
"....some kind of bakery conspiracy"

Core....you gotta be living some sort of paranoid life with all these conspiracies!  A bakery consiracy?  That's the best one yet!  I guess now I'll have to be checking my cupcakes for bugging devices.
Return over deposits:   66.82%
IRR:   86.54%
As of April 30, 2014

core

  • Hero Member
  • *****
  • Posts: 1790
  • Your loss is my gain
    • View Profile
Re: 6 Outrageous Facts That Show How Payday Lenders Screw Consumers
« Reply #14 on: October 28, 2013, 04:00:04 PM »
Maybe that was too strong of a word.  But what would you call it when a group of bakery owners gets together and decides to lie to their customers about day-old bread laws in order to get the customers to shell out more cash for higher priced bread?  Bakery understanding?  Bakery memorandum of agreement?

Besides, yojoakak is the one who came up with it.  I'm just agreeing with him, is all.