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Online installment loans have taken the subprime market by storm

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321–329 of 329 posts

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

#321

Earlier quoted context omitted.

Whoa, they are buying purses and vacations on these loans? Can you characterize the loans for me -- how much, what interest rate, what % of defaults do you see? I'd be very interested in a detailed analysis, that sounds very important.

At least with the peloton purchase, it sounds like they are using Affirm. Generally if you have good credit, interest rate is zero. I've seen it on other high ticket items for sale online. In this case Affirm reduces the friction of buying higher priced products. The phone I'm typing on now was financed through symphony credit. Zero interest, and 36 monthly installments. I'm sure there are penalties if I don't pay ev…

When the interest rate is zero it is because if you make a mistake and miss a payment, the claws come out and the penalty rate is high enough not only to pay for servicing all the loans which earn no money but also earn a profit. There is no free money.

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

#322
post #73

Earlier quoted context omitted.

No, it's not a better outcome than if the market was private because frankly no one would graduate with $150k in debt for a degree in basket weaving if private lenders were backing the loans. A well regulated private market would prevent the extreme situations that we are seeing today. You can make a (somewhat legitimate) argument that we shouldn't require young kids to major in subjects that result in good paying jo…

> No, it's not a better outcome than if the market was private because frankly no one would graduate with $150k in debt for a degree in basket weaving if private lenders were backing the loans People get private loans for bullshit degrees all of the time. Lenders don't care, because private student loans are non-dischargeable.

In a privatized system student loans would be dischargeable under the existing bankruptcy laws, as they were before Congress changed the law.

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

#323
post #73

Earlier quoted context omitted.

No, it's not a better outcome than if the market was private because frankly no one would graduate with $150k in debt for a degree in basket weaving if private lenders were backing the loans. A well regulated private market would prevent the extreme situations that we are seeing today. You can make a (somewhat legitimate) argument that we shouldn't require young kids to major in subjects that result in good paying jo…

What does it mean to “fully socialise it” in the context of being from the US? Do you mean buying out all of the universities? PS: I come from Europe, studied in the UK when the tuition was capped at £3K/year.

No, it would mirror the European experience. Essentially just capping the cost of tuition, fees and room/board and subsidizing the schools to an extent to make up the difference.

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

#324

Earlier quoted context omitted.

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…

Related. One day you'll be dying. And you'll have a whole lot of savings you didn't use. Fun you could have had. Will you wish you'd spent it, or will checking out with money in the bank give you pleasure in itself?

My theory is that some people has an innate ability to be happy without spending much money. They don't travel much and don't eat expensive food ... and that's just fine for them.

On the other hand, some (most?) people NEED lots of money to be happy. Their nerve systems are just low-efficiency in terms of how it is capable of converting a chunk of money into happiness.

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

#325
post #296
post #295

Earlier quoted context omitted.

Interesting, as a member myself, I hadn't heard of the immigrant services program. And I agree, the poverty cycle is of course not inescapable. But boy is it a lot harder than I think those of us who have always been more fortunate think it is.

Just to confirm I am not making things from a standpoint of $ given to us: My grandparents were either both legally blind (one side, very poor and kids stressed out), or rather poor (especially compared to most americans today) farmers in Mexico with 13 children. The "privilege" I have enjoyed (other than skin/benefit of the doubt?--unsure since I probably don't fully understand that from everyone else's perspective:…

Encouragement to work hard and that you could do it is more than many, many in poverty get. 2 parents and the ability for one to be stay-at-home is also an amazing privilege.

Also, did your parents ever ask you for money? Because that is also a very frequent thing in poverty. Very needy parents that will be asking for, even expecting money the minute you have a little bit.

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

#326

Earlier quoted context omitted.

I am not the OP, but I do play games. And I tend to hoard the hell out of everything I find in the game (especially in RPGs). And I do tend to have a lot of unused inventory by the end of the game. At the same time, I don't do well with money, I eat out too much, drink too much, make impulsive purchases (mostly gifts and hobby related things, but still) and generally do not watch my budget very carefully. I don't thi…

Seconding. I too always ended RPG games with inventory full of stuff I opted to save for actual emergency and not just some final boss. But it didn't translate to real life - I'm not exactly an impulsive buyer, but not all that savvy with money either (my current personal finance strategy is ensuring I spend less than I earn, and trying to increase how much I earn). In the past, I've experienced running out of money…

You haven’t fought that boss in real life that made you use half of your inventory and you still died which turned you into the video game hoarder you are today. Once I came close to homelessness I realized I too must hoard my money.

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

#327
post #325
post #296

Earlier quoted context omitted.

Just to confirm I am not making things from a standpoint of $ given to us: My grandparents were either both legally blind (one side, very poor and kids stressed out), or rather poor (especially compared to most americans today) farmers in Mexico with 13 children. The "privilege" I have enjoyed (other than skin/benefit of the doubt?--unsure since I probably don't fully understand that from everyone else's perspective:…

Encouragement to work hard and that you could do it is more than many, many in poverty get. 2 parents and the ability for one to be stay-at-home is also an amazing privilege. Also, did your parents ever ask you for money? Because that is also a very frequent thing in poverty. Very needy parents that will be asking for, even expecting money the minute you have a little bit.

My dad found me simple employment at a very young age (delivering newspapers), which let me buy my own clothes, school stuff, etc. (edit: No, they didn't ask me for money. But you bet they would get it if they did.) But he also helped me in college a few times when $ was tight. But we had extremely frugal life habits, that came from the farming/broke years. And we prayed a lot, did what we knew we should. Additionally, we paid tithing, which has real promises of specific blessings, and we received those (we always had what we needed). I have learned for myself and now know God lives and answers prayers, which helped us much, and still does. More at lukecall.net .

(Edit: Actually, my parents still live frugally so they can help other people. I don't recall eating in a restaurant until I was a teenager on a date (though it probably happened, just very rarely); we had a garden which supplemented our food budget for a large family, television was not a key part of the lifestyle but chores were (it seemed my dad was always working some helpful task for the family, except on Sundays), we often bought clothes secondhand, and we knew we were loved. The advice I have given above and below in various parts of this discussion is what we did, and I never, ever felt deprived. Food was generally homemade (cold cereal only on Sundays; Mom learned to cook mostly after marriage, but they both learned very well IMO--I salivate as I think about it), we ate a lot of wheat and beans (but not only), some bought in bulk to save. And we were very blessed, again, praying daily as a family and trying to do what we knew we should. There are people who can help with individual situations, and much good advice at the sites I have linked. But the blessings of God are what I credit the most, by far. Again, more (skimmable), at lukecall.net, a simple site with no sales or javascript.)

(We were/are far from perfect, and yes life has big challenges, but we definitely are trying, and we know what direction we should be pointed in. There is peace, direction, and connection with God available to those who want it enough to act and keep trying. My email contact is on that web site for further questions; am happy to try to answer. The more I think of it all the more I am grateful.)

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

#328

Earlier quoted context omitted.

At least with the peloton purchase, it sounds like they are using Affirm. Generally if you have good credit, interest rate is zero. I've seen it on other high ticket items for sale online. In this case Affirm reduces the friction of buying higher priced products. The phone I'm typing on now was financed through symphony credit. Zero interest, and 36 monthly installments. I'm sure there are penalties if I don't pay ev…

That's not really what the article is talking about though. That kind of loan is nothing new. My parents were buying furniture on zero-interest installment plans decades ago. They offer zero-interest financing as an incentive to buy. The article is about installment plans replacing high interest payday loans, which is a whole other game.

How do they make money offering 0% financing on 36 month plans, let's say? Are they wagering that the cost of inflation/opportunity-cost of those dollars that the good people got is far outweighed by the benefits of people not paying on time? Seems wild that SO many of the customers wouldn't be able to pay on time...

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

#329

Earlier quoted context omitted.

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…

Another gem!
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