Online installment loans have taken the subprime market by storm • Hacker News Board

Re: Online installment loans have taken the subprime market by storm

#171

Post by logicchains » Tue, Oct 29, 2019, 5:26 PM UTC

christophilus wrote: post #143

davidhyde wrote: post #86

Earlier quoted context omitted.

Your income level does not make you wealthy, it is your capacity to absorb financial speed bumps. At uni, I made less money than some of my peers but I felt wealthier than them. This continued into our professional lives and had nothing to do with our relative income levels. Back then I always had spare cash to spend when an opportunity arose. An unplanned weekend trip away, a celebratory night out, no problem. Sure…

This brings up a tangential question I've had lately. When I played video games (especially RPGs), I always ended the game with a mountain of unused resources at my disposal. I rarely used items, cash, etc, unless the ROI was plainly evident. Many of my friends would just burn through cash / items as soon as they had them, and were often in a bind during tough battles / situations. I wonder if this followed us into l…

There was a studying showing that the trait behind this tendency towards saving, the ability to delay gratification, is present relatively early in childhood, and has strong predictive effect on success in life: https://en.wikipedia.org/wiki/Delayed_gratification#The_Stan... . Perhaps this implies that no matter how rich society gets, there'll always be people who just burn though whatever they earn. This would partially explain why people in poor countries like China and India are still able to save a greater percantage of their income than people in western countries who earn an order of magnitude more.

Re: Online installment loans have taken the subprime market by storm

#172

Post by kortilla » Tue, Oct 29, 2019, 5:26 PM UTC

philipov wrote: post #47

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…

> Instead we should be looking at ways to make it so that giant unpredicted expenses don’t happen at all. Or maybe fix it from the other end: reduce inequality so fewer people are living paycheck to paycheck and can actually build savings to use for unpredicted expenses.

Reducing inequality is a completely orthogonal. Taking everything from the top 1% doesn’t fix poor money management skills.

Additionally, there are many middle class folks making well above average that still live paycheck to paycheck by living beyond their means (huge house, multiple cars, etc).

Poor money management != poor and more money does not fix it.

Re: Online installment loans have taken the subprime market by storm

#173

Post by manthedudeguy » Tue, Oct 29, 2019, 5:26 PM UTC

christophilus wrote: post #143

davidhyde wrote: post #86

Earlier quoted context omitted.

Your income level does not make you wealthy, it is your capacity to absorb financial speed bumps. At uni, I made less money than some of my peers but I felt wealthier than them. This continued into our professional lives and had nothing to do with our relative income levels. Back then I always had spare cash to spend when an opportunity arose. An unplanned weekend trip away, a celebratory night out, no problem. Sure…

This brings up a tangential question I've had lately. When I played video games (especially RPGs), I always ended the game with a mountain of unused resources at my disposal. I rarely used items, cash, etc, unless the ROI was plainly evident. Many of my friends would just burn through cash / items as soon as they had them, and were often in a bind during tough battles / situations. I wonder if this followed us into l…

Something to always consider - all of that unused cash at the end is something you didn't do during the game (your life) that you probably could have benefited from.

Re: Online installment loans have taken the subprime market by storm

#174

Post by cascom » Tue, Oct 29, 2019, 5:27 PM UTC

People don’t think in APR for small dollar loans they think in nominal terms.

Also - loan origination/servicing costs have a nominal floor - it costs the same to originate/service a $50 loan as a $500 or $5000 one, necessitating what would appear to be a abnormally large interest rates.

Re: Online installment loans have taken the subprime market by storm

#175

Post by nostrademons » Tue, Oct 29, 2019, 5:28 PM UTC

christophilus wrote: post #143

davidhyde wrote: post #86

Earlier quoted context omitted.

Your income level does not make you wealthy, it is your capacity to absorb financial speed bumps. At uni, I made less money than some of my peers but I felt wealthier than them. This continued into our professional lives and had nothing to do with our relative income levels. Back then I always had spare cash to spend when an opportunity arose. An unplanned weekend trip away, a celebratory night out, no problem. Sure…

This brings up a tangential question I've had lately. When I played video games (especially RPGs), I always ended the game with a mountain of unused resources at my disposal. I rarely used items, cash, etc, unless the ROI was plainly evident. Many of my friends would just burn through cash / items as soon as they had them, and were often in a bind during tough battles / situations. I wonder if this followed us into l…

Also have similar spending patterns as the two of you, and played video games when I was younger. Yes, I had similar spending patterns in RPGs and particularly RTS games. I'd hoard resources to make sure I always had some when I needed them.

The thing is - in both video games and life, this is not always a good thing. In Starcraft, if you've banked over 1K minerals you are doing something seriously wrong; if you look at pro games, they rarely have more than a couple hundred minerals stored up, because they have a strategy that they're continuously executing and it involves burning minerals to convert into more minerals. Similarly, if I'd been willing to run with zero cash cushion, spending everything I made and locking myself into the corporate treadmill, I'd be a homeowner and have a net worth about 50% higher than I currently do. Optionality & security have a price; you trade efficiency for it, and it comes out of the standard of living you can maintain.

I think people just have a certain set point for the amount of risk they're willing to run, and it's probably partially genetic and partially from watching how your parents react to risk and internalizing that.

Re: Online installment loans have taken the subprime market by storm

#176

Post by Frondo » Tue, Oct 29, 2019, 5:28 PM UTC

alkonaut wrote: post #87

blhack wrote: post #59

Earlier quoted context omitted.

I’m sorry but this is a ridiculous, unactionable answer that is functionally equivalent to “well we should make things better”. Yes of course we should, HOW? We need more innovative solutions to these problems. I like seeing electric bicycle shares, I like seeing community-based, high density housing with shared kitchens and bathrooms, I like predictive diagnostics and telemedicine (although the FDA is fighting it).

> Yes of course we should, HOW? Look at how society works in countries that are better than your own at this. What is the fundamental differences in politics, media climate, labor market laws, health insurance education. Then vote for a politician or party that tries to improve things in that direction. I don't think there are technological quick fixes. The solution to "people live paycheck to paycheck" I think is e.…

The two democratic front-runners have solutions for this:

* strengthen union membership (union jobs pay an average of 13% better for the same work, and that's with union membership at an all-time low in the US), * reduce the ability of money-holding industries like these people to extract so much (like what Elizabeth Warren's CFPB has been doing, even with current meddling from the administration), * contain costs for the most expensive things in American life (health care -- some sort of universal coverage plan, and education -- student debt forgiveness and cheaper education options), * raising the minimum wage (which, had it tracked productivity in the US and not left unchanged since the 90s, would now be something like $20 an hour)

that's off the top of my head.

Andrew Yang has his "freedom dividend" which, the more you get into the weeds, the less of a benefit it'll seem to have, but that's even another idea.

These are all ideas floated in opposition to the current administration, which wants to weaken unions, keeps fiddling with even the shitty Obamacare to take health care back to the bad old days, and so on.

So, people are talking about it, and have plans drawn on what other countries are doing more successfully -- no real reason they wouldn't work here, except for the historical baggage and pulling-up-the-ladder that dominates US political discourse.

Re: Online installment loans have taken the subprime market by storm

#177

Post by koolba » Tue, Oct 29, 2019, 5:28 PM UTC

bryanlarsen wrote: post #71

mumblemumble wrote: post #56

Earlier quoted context omitted.

I don't want to tut-tut the poor, but I do want to tut-tut consumer culture in general. There are a whole lot of people who _should_ be able to afford an unexpected car repair bill, and could quite easily do so, if they weren't spending $100 a month on cable TV, $800 every other year on a high-end smartphone, $500/month on owning an SUV when a $200/mo economy car would serve just fine, etc., and put the money into a…

> $100 a month on cable TV given that the average American spends 4 hours/day watching TV[1], that's well under $1 per hour of entertainment. There aren't a lot of hobbies or entertainment media that are cheaper. 1: https://www.statista.com/statistics/186833/average-televisio...

Less than $1/hour if you have a family.

Re: Online installment loans have taken the subprime market by storm

#178

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

mikestew wrote: post #88

Reedx wrote: post #58

Earlier quoted context omitted.

> cheaper transportation options, cheaper access to healthcare or preventitive care, predictive diagnostics, etc. I'd also add teaching financial literacy/strategy in school. A lot of mistakes could be avoided. I learned the hard way and it took a long time to dig myself out. There's a lot that would've been very useful to have known earlier.

Do we not do this anymore? When I was in high school almost 40 years ago, there was a class/classes that taught things like balancing a checkbook (go ask your parents), keeping a household budget, how interest works, and the like. I didn't take that class (kinda wished I had), so I don't know what it was called. If we don't, we should. Especially now that we're all responsible for our own retirement. With nearly ever…

I was required to take a class like in high school 10 years ago and it was called consumer economics where we practiced balancing our checkbook (ironically since i've never even written a check), learned about 401ks, taxes and other stuff. This was in a Chicago suburb for those wondering.

Re: Online installment loans have taken the subprime market by storm

#179

Post by gruez » Tue, Oct 29, 2019, 5:30 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…

What dataset has this information? I haven't personally gotten a payday loan, but I don't think they ask what the money is going to be used for.

Re: Online installment loans have taken the subprime market by storm

#180

Post by kortilla » Tue, Oct 29, 2019, 5:31 PM UTC

ianleeclark wrote: post #167

blhack wrote: post #147

Earlier quoted context omitted.

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).

Ahh, okay. I guess we'll just let people die in the streets then.

People aren’t dying in the streets because Bezos has 100 billion. Pointing to rich people is just a distraction for people who can’t do math.

Even if you could magically trap all of them in the US and wealth tax them away, it’s a meaningless drop in the bucket. Seize all of the money from everyone with 50 million+ in the US and you don’t even have enough to pay for Medicare for all.