Online installment loans have taken the subprime market by storm

Post by gruez » Tue, Oct 29, 2019, 5:21 PM UTC

rootusrootus wrote: post #45

MuffinFlavored wrote: post #12

What's HN's opinion on 0% balance transfers? Yes, there's usually a 3% fee but... I've been able to borrow about $5k-$12k for a one time 3% fee over 18 months multiple times in a row now. I make sure to always pay the balance back before it is due. Why don't more people who need a cash infusion do this?

Be careful with balance transfers. At 18 months, a 3% fee is like a 3.75% APR. If the balance transfer is only 12 months, it's about 5.5%. Still a lot better than a subprime installment loan, but a 3% fee is not a 3% APR.

Post by dsfyu404ed » Tue, Oct 29, 2019, 5:23 PM UTC

chasd00 wrote: post #135

entropicdrifter wrote: post #11

Earlier quoted context omitted.

Except that student loans can't be abandoned even if you declare bankruptcy. That one little factor makes them some of the worst loans imaginable in terms of long-term prospects.

the tradeoff is insanely low interest rates. Without the federal backstop student loans would have the interest rates of credit cards because as soon as new graduates get into the workforce, can't find a job, they'll file for bankruptcy to get out of the loan. Managing that risk without a backstop means incredibly high interest rate to cover for the losses of loans lost in bankruptcy.

Post by WhompingWindows » Tue, Oct 29, 2019, 5:24 PM UTC

Cd00d wrote: post #126

blhack wrote: post #35

Okay these loans certainly sound like a bad deal, but what are people supposed to do? Say your car breaks and you can’t get to work. For all of us here billing out >$100hr or whatever your local consulting rate is, the answer is some calculus around the cost of losing your job vs the cost of fixing it. But for MOST people, the cost of fixing it is functionally infinite. They literally do not have even a few hundred d…

In the datasets I use at work, I'm seeing these or similar credit not for emergency solutions, but rather for luxury consumption (the very poor aren't likely to be in our panels). People are buying Peloton bikes, exotic vacations, and luxury purses, and hoping to pay that debt off in installment plans. I worry about when enough people hit the tipping point where their monthly minimums on deeply depreciated goods are…

Post by ianleeclark » Tue, Oct 29, 2019, 5:25 PM UTC

blhack wrote: post #147

ianleeclark wrote: post #114

Earlier quoted context omitted.

> People have been trying that for 100 years or so. So far it hasn’t worked. We didn't even have the minimum wage 100 years ago in the United States. How are you going to deride people for not offering solutions, then, when they offer viable solutions, attempt to magically will-away history?

https://en.wikipedia.org/wiki/Second_Bill_of_Rights These ideas aren’t new. The idea of taxing the wealth even more is ALSO not new, and we already have tried it and had it fail. (France has tried this, as well as other European countries, with usually disastrous results).

Post by WhompingWindows » Tue, Oct 29, 2019, 5:25 PM UTC

kart23 wrote: post #157

tempsy wrote: post #139

Is there no money in financial education...? I feel like there's no controversy in suggesting that the state of personal finance in this country is a disaster, even for people who are highly educated (how many tech workers actually understand how their startup options work?) I just wonder what a viable business model would be for quality personal financial education or resources.

A Khan academy for personal finance would be great. Investopedia is a cool resource, but for the financially illiterate, it's pretty tough to understand the wealth of knowledge there.