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Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

npr.org

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Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#231

Post by pessimizer »

elipsey wrote: post #46
param wrote: post #7

Here is the best argument in favor of the change: >> if the rule had kicked in, some two-thirds of borrowers wouldn't qualify for a payday loan If the above is true (and not fake news), I would like to understand how the industry was expected to survive with 2/3rd of its customer base taken away in an instant; and what alternative services these customers would have been routed to...

What do you think "fake news" means, and how would this statement qualify? "[...]the official, who spoke to journalists on condition of anonymity, said that if the rule had kicked in, some two-thirds of borrowers wouldn't qualify for a payday loan." Unless you want to insinuate that NPR completely fabricated this story to drive engagement, you should probably just say "incorrect" or something like that.

"anonymous administration official"

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#232

Post by SilasX »

rosser wrote: post #208
SilasX wrote: post #202

Earlier quoted context omitted.

Where did I say I was grounding any of this in a chain email? I started out objecting to someone's over-the-top skepticism that anyone has every bought a luxury food on foodstamps. Are you saying there aren't pockets of near-permanent poverty in America that depend on social spending? Nice, didn't know that was patched up.

I guess I don't find referencing research in response to cultural tropes to be "over-the-top skepticism". Have a good day.

Neither do I, which is why I never applied the appellation "over-the-top skepticism" to "referencing research"; it was applied to the commenter's ridicule of an account of someone buying a luxury food with foodstamps.

Is there a reason you thought my appellation was being applied to something else?

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#233

Post by [deleted] »

bedhead wrote: post #175
firasd wrote: post #31

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.”

If it is so awful, why do so many people use it? Most critics don't understand the depressing reality that payday lenders are often better than the alternative. I would also point out that the companies vary in profitability, and they're not particularly good businesses. Default rates are so high that the lenders often generate returns on equity below many regular banks, or just on par.

[deleted]

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#234

Post by thaumaturgy »

ghufran_syed wrote: post #228
towelr34dy wrote: post #58

Earlier quoted context omitted.

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…

Same, I think I wrote about this before on HN, but I once had my bank freeze the funds in my account, while driving across the country with my kids. We would have ended up sleeping in a park if we couldn't use a 24-hour pawn shop (yay Las Vegas!) with a super-high interest rate to get some cash overnight to pay for the hotel. We paid it back the next day, and we're still super grateful it was available. When you ban…

It is unbelievably arrogant of so many people to keep ascribing motivations to other folks they haven't even talked to.

Hey, it's great that a pawn shop helped you out in your case, where you didn't have a credit card or apparently any other option. That doesn't even a little bit offset the predatory nature of payday loan outfits, and they are predatory. I have no problem with people who want to loan money to other people who have trouble getting loans. I do have a problem with turning it into a business practice that brazenly targets poorer communities and levies fees and interest rates that ensure that poor people stay poor.

But, if it helps make this a more black-and-white issue in your mind, sure, keep believing that people like me are in favor of payday loan regulation just because of our moral superiority complex.

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#235

Post by bko »

hobs wrote: post #122
bko wrote: post #82

Earlier quoted context omitted.

From another article: > A typical two-week payday loan comes with a $15 fee for every $100 borrowed and has an annual interest rate of nearly 400%, according to the CFPB. Over It's technically 400% APR, but its because the amount borrowed is very low. What should the rate be? 10% or ~$0.40 for the two week loan? There is a certain amount of overhead in processing a loan. Especially considering that the clientele ofte…

Then they could offer a flat fee instead of an ever compounding one that is predatory to their clients (but they dont.)

It is a flat fee... $15 per two weeks

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#236

Post by jpindar »

Angostura wrote: post #119
rayiner wrote: post #81

Earlier quoted context omitted.

And Facebook and Google want to get you locked in a cycle of mindless browsing and ad consumption. The difference is that Facebook and Google operate in markets with high barriers to entry resulting in fat profit margins. Payday lenders, by contrast, operate in a market with immense amounts of competition. There’s one on every block in most places. Payday lenders don’t lock people in cycles of debt. What looks people…

> If you take away that option, I don’t get my car fixed and lose my job. That’s the alternative. Except the rule that is being killed is the one that told lenders they needed to check to ensure that the borrower would be able to pay the loan back. In your case, with your car and your job, you would pass this test. And if you couldn’t then lending the money would put you in a worse position than immediate unemploymen…

What test? Please define "able to pay the loan back".

AFAIK, payday loan companies do require the borrower to be employed, hence the name "payday".

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#237

Post by hnmullany »

tryptophan wrote: post #112
CydeWeys wrote: post #67

Earlier quoted context omitted.

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 that they can charge many times the original amount in interest per year. These are short term (till the next payday) loans. Thats like saying a hotel room costs 36.5k/yr. News websites posting crazy 400% apr numbers are being deliberately misleading. When in reality its more like you pay a 20% fee to get money now and repay it next payday in 2 weeks.

But a hotel does cost $36,500 a year if you stay in it that much and that's closer to what a substantial percentage of pay day borrowers actually end up doing:

>> Payday loans are often thought of as “two-week” loans, which aligns with the data’s median term >> of 14 days. However, since the terms of these loans are often tied to the borrower’s pay cycle, >> which can vary by employer and source of income, the average loan length is 18.3 days.

>> And while payday loans are marketed as short-term solutions — get cash now, pay it back in two >> >> weeks — the CFPB found that over the course of 12 months, more than one-third of borrowers will take >> out between 11 and 19 payday loans. Fourteen percent of borrowers will take out 20 or more payday >> loans within this same time period.

>> It’s on these borrowers that payday lenders make the most money. According to the CFPB, 76% of >> lenders’ fees come from borrowers taking out at least 11 loans in a year.

from: https://consumerist.com/2013/04/26/the-average-payday-loan-b...

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#238

Post by jessaustin »

CydeWeys wrote: post #224
jessaustin wrote: post #137

Earlier quoted context omitted.

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.

Well for one, there's more than an order of magnitude difference between the interest rate charged on credit cards and the interest rate charged on payday loans. 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.

Yes there is a difference and that's why these borrowers can't get a credit card. (If the rules for credit card interest rates were relaxed, they could, not that I'm advocating that...) It is trivial to simply observe that some borrowers pay higher rates than others.

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#239

Post by iambateman »

rayiner wrote: post #89
Arbalest wrote: post #84

Earlier quoted context omitted.

GP starts with a fairly simple premise, the rate of default is high, so that much interest is required to make up the shortfall. Of course the rest of it is hinged solely on this premise, rather than acknowledging that the very act is taking advantage of people who can't or won't think far enough ahead to see why it is a very bad idea. It is of course the old argument that some economists use a little too regularly t…

The idea that selling products and services to poor people is “taking advantage of them” in the terms reality demands is bonkers.

In that framework, is it possible to sell someone something (anything) they ought not purchase? Is there such a thing as a “poor choice”?

The answer is yes! Fentanyl has a market. Student loans for a degree in Modern Studies have a market. Impossible health supplements have a market.

Selling products can certainly take advantage of a person.

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#240

Post by hoaw »

mrhappyunhappy wrote: post #223
jdietrich wrote: post #143

Earlier quoted context omitted.

>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…

Except in your example the actual situation would play out like this: person borrows $80, thinks his payment is $20, makes a payment. Next paycheck he sees a withdrawal for $45. Wondering why he brushes it asides figuring only $53 left to pay. Another $45 comes out - ok $8 left all is good. Then sees another $45 come out and panic sets in. Borrower makes a phone call to see what’s going on and why he is overcharged.…

It is supported because it is accepted, especially in places like hacker news, to not be scientifically literate. In fact it is so obviously problematic that you would to a large degree have to be obnoxious to support it without reserve. Which is why you see all these rhetorical arguments, sarcasm and hostile engagements in this thread. Of course from a reasoned perspective this would indicate that you were wrong. But if you have already realized that they aren't going to win with arguments, it is instead seen a good thing that the discussion isn't about that.
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