221–230 of 305 posts
Anytime I see people defend this kind of practice, the John Ruskin quote comes to mind: “The dullest of all excuses for usury is that some kind of good is done by the usurer.”
This has nothing to do with morals, it's just economics.
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This is exactly what I was referring to by "elitism". If people were better off to not have the loans, why would they ever use them? You think you know better than these people, but you are not in their situation. Perhaps instead of restricting options, you should offer free poverty counseling or something. Expand people's options, don't restrict them.
In the context of limited time and information when making decisions - i.e. real life - removing an option that's (on average) a mistake can make the average chooser better off. That's obvious; it's why we have guardrails on the sides of highways. The question is utilitarian, not absolute. It depends on the specifics of the regulation. Furthermore you don't have to think that the regulators are elite - anyone can mak…
What if it’s not in the heat if the moment and you’ve taken my best option away because of a blanket restriction.
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The people using paydays loans usually aren't entrepreneurs, so your example -- while an interesting case -- doesn't apply to the spirit of the regulation. When I had my first real job out of college, I didn't manage my money well and ran out of cash well before my next payday. I went to a check-cashing type of place to try and get a payday loan, but the state had outlawed them a couple of years prior. Had I been gra…
>The people using paydays loans usually aren't entrepreneurs, so your example -- while an interesting case -- doesn't apply to the spirit of the regulation. If you have no access to better credit, payday loans are often the least-worst option. If your car breaks down and you have no other means of getting to work, borrowing a few hundred bucks at usurious rates is probably better than losing your job. If you've recei…
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Pretty extraordinary to be defending the most insidious form of business around. Payday lenders do not remotely provide the same duty of care that more established lenders like banks do. And as such they need to be regulated to ensure that they aren't lending to people who are not in a financial position to repay the loans. Ignoring the impacts to consumers it is a systemic risk to the economy to allow this behaviour…
Wells Fargo might be an exception to that? Actually lots of credit cards are pretty terrible too. Not all payday borrowers are going to just say "ok I guess I'll let my life collapse" if payday loan firms disappear. There are less legal and less safe ways to get a loan. This seems like the wrong way to care about the poor.
So putting an emergency on a credit card is a >10X better option than using a payday loan. You can essentially borrow money at a rate of around 2% per month that way.
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If that was what payday loans were actually used for then their existence would be a little bit easier to justify. That isn't what payday loans are used for. They are usury of the worst kind taking advantaged of the worst off in our society. I'm not going to sit here and pretend I have a definitive solution, but perhaps bringing actual banking to these neighborhoods would be a good start.
It's not about having bank branches nearby, it's about people that can't get traditional loans or credit cards. These are loans of last resort for people that don't have enough (or good enough) credit. The default rate on these is around 20%. I don't have a solution either, but this is a more nuanced issue than just not having a bank nearby.
Then we need higher taxes to fund loan insurance and legally enforced interest rates for loans. Wealth and poverty in the USA is an allocation problem: every billionaire represents a public policy failure.
If you're concerned about either "people might take advantage of the system" or "what if they spend the money on stupid things", my preemptive answer is: the people who become billionaires do so by taking advantage of the system and if we can't trust people to spend money rationally, what does that imply about capitalism as a whole?
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I'm sorry to dismiss this more or less out of hand, but this is a case of anecdotal evidence. Using your case to generalise to greater choice is falling victim to the assumption that all players are rational actors.
How dare consenting adults do things I find offensive. I don't drink. Drunk people act stupid. Let's ban alcohol. It'll be great. Prove to me it won't! Oh, you enjoy alcohol responsibly? That's just anecdotal. Not like MY anecdotal evidence, I see drunks everywhere... everyone knows that. And they are all alcoholics who are depraved by predatory beer companies. My anecdotal evidence is good and corroborated by my tri…
If you want to be on the road when people are trying to get home from the bar, you should seek market solutions instead of ridiculous prohibition.
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Payday lenders are predatory. They want to get people locked into a cycle of debt, so that they can charge many times the original amount in interest per year . I'm surprised to see anyone defending them.
So are banks, credit card companies, etc. Their dream is always the customer making minimum payments and maybe some late payments for fees. Look at the dump that is Wells Fargo and the their precious behavior with deposit/withdrawal ordering in daily reconciliation to screw people into overdraft fees. Drawing the line at payday lenders seems super arbitrary.
Banking dream is lending money to people who don't need it.
Anytime I see people defend this kind of practice, the John Ruskin quote comes to mind: “The dullest of all excuses for usury is that some kind of good is done by the usurer.”
I've had to take out loans for my business that were at usury rate. It saved me. If it wasn't there, if it was regulated out of existence; I'd have gone to a shark. I was not going to let cash flow cause me failing. Having said that, I'm very happy there was a lender of last resort that won't break my legs. Despite them screwing me in fees. Honestly, I've never understood people who suffer from legislitis: They see a…
When you ban these things, you're imposing your value judgement on others, because you think you know better than "them poor folk".
I am fine with some regulation to make it clear what the cost is, something like: "you are borrowing $100, if you pay it back in 1 month, you will have to pay back $130. If you pay it back in 2 months, touch will pay back a total of $170 etc. ..."
From the article: > The way payday loans work is that payday lenders typically offer small loans to borrowers who promise to pay the loans back by their next paycheck. Interest on the loans can have an annual percentage rate of 390 percent or more, according to a 2013 report by the CFPB. Another bureau report from the following year found that most payday loans — as many as 80 percent — are rolled over into another l…
They are ultra short term loans, so the rate is going to be outrageous when expressed as an APR...
Why don't other countries have problems with payday lending? My guesses: - People aren't as desperate - Lending can only happen though banks - Loans can't be given to you can't prove reasonable chance of repayment - You can't garnish people paycheck below a certain amount, so payday lender would never get any money. Any other explanations?