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Online installment loans have taken the subprime market by storm

bloomberg.com

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

#101

Post by ianleeclark »

d--b wrote: post #68
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…

Sure, but wouldn't be better for most people in this situation to simply default on their current debt, that take on these 150% loans that will bankrupt them just as well 2 years later.

> Sure, but wouldn't be better for most people in this situation to simply default on their current debt

You say that, but, in a year or two when your rent has gone up so far that you have to move, you're looking at awful credit. Then how do you get into an apartment where they do credit checks and they see you've got awful credit. Those apartments will either charge an arm and a leg in security deposits, or deny you.

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

#102

Post by geggam »

Djvacto wrote: post #96
geggam wrote: post #85

Earlier quoted context omitted.

> but the economy is taking advantage of them. Interested in hearing how you explain this. I dont disagree with you but I would like to know what you see as the root cause.

I'm pretty sure it's explained by the description of "Company gets money through directing employee labor, but an uneven portion of it is given back to shareholders instead of employees". aka being employed is a worse deal than being an investor, disproportionately.

I was hoping for more insight than "my employer doesnt pay enough" ... while true its not really a root cause of the situation IMO

You can always start your own business or simply work for a different company. No one owes you employment.

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

#103

Post by Drakim »

geggam wrote: post #53
toomuchtodo wrote: post #33

Earlier quoted context omitted.

It’s uncharitable to have a disdain for those without empathy when a large component of success is luck? If you think success is guaranteed with grit and hard work, you are woefully misinformed. You can do everything right and still fail hard. “Personal responsibility” is a dog whistle for the willful ignorance of the necessity of government regulation and social safety nets.

Granted I only have 5 decades of perspective but I have noticed people who get lucky tend to be the ones who dont quit. The ones who quit tend to call those who dont quit lucky.

The ones that die from medical conditions because they can't afford treatment you don't "notice" at all, since they are dead and gone.

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

#104

Post by blhack »

philipov wrote: post #78
blhack wrote: post #74

Earlier quoted context omitted.

How is that actionable? Are you going to show up at Jeff Bezos’s house and rob him?

It's actionable by passing laws that limit the upside executives can extract from capital investments and raise minimum wage on large business. There will always be unexpected expenses, so you have to pay people enough to be able to save. Much better than making people dependent on those who control the mechanisms for allegedly limiting unexpected expenses; that's just a plan for increasing social control available t…

People have been trying that for 100 years or so. So far it hasn’t worked.

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

#105

Post by ac29 »

maxerickson wrote: post #18
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?

They simply don't qualify. Would you even consider a $3,000 loan at 25%? That's what's going on with these companies.

25% would be a relative bargain - that's better than some people's credit card rates. The screenshot in the article shows a range of 60-225% APR.

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

#106

Post by toss1 »

gruez wrote: post #89
bryanlarsen wrote: post #71

Earlier quoted context omitted.

> $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...

Just because it's cheap doesn't mean there aren't cheaper alternatives. Most people could easily replace that with a netflix subscription for $13, since they already have an internet connection.

People could also replace it all with a free library card.

It isn't like television/video is some kind of necessity for life.

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

#107

Post by [deleted] »

geggam wrote: post #90
toomuchtodo wrote: post #63

Earlier quoted context omitted.

And those who don’t quit and still die in the gutter? “Lack of hustle”? Your five decades is a drop in the bucket of human experience. I recommend more empathy and introspection on suffering of your fellow human.

I am not the only person with this perspective. Some very accomplished people agree with me. “Shallow men believe in luck or in circumstance. Strong men believe in cause and effect.” ― Ralph Waldo Emerson You don't know that dying in a gutter was actually better than the other option for their life.

[deleted]

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

#108

Post by ianleeclark »

geggam wrote: post #102
Djvacto wrote: post #96

Earlier quoted context omitted.

I'm pretty sure it's explained by the description of "Company gets money through directing employee labor, but an uneven portion of it is given back to shareholders instead of employees". aka being employed is a worse deal than being an investor, disproportionately.

I was hoping for more insight than "my employer doesnt pay enough" ... while true its not really a root cause of the situation IMO You can always start your own business or simply work for a different company. No one owes you employment.

> You can always start your own business

How is starting your own business an even remotely viable option for people who are so desperate that they're taking these predatory loans?

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

#109

Post by nkrisc »

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…

My understanding is that no, such classes are uncommon in American high schools these days. I went to a public magnet high school in the 2000s and I can't recall any such class being offered.

As for most financial topics, I don't have much of a mind for it, so I would greatly benefit from a teacher. I need to be taught it, it's very difficult for me to teach myself finance. So I've simply erred on the side of heavily saving so at the very least I have a year or two of buffer.

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

#110

Post by wastedhours »

tw04 wrote: post #50
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…

You had me until: > Yeah, they know the loan is bad. They probably don’t have any other options. I think it’s a pretty poor assumption to assume all the people taking out these loans understand exactly what they’re getting into, and what other options they may have. I think there should be a mandatory 20 minute education session for anyone taking out a payday loan/installment loan.

> I think there should be a mandatory 20 minute education session for anyone taking out a payday loan/installment loan

I've re-read that sentence several times now and each time it makes more sense. I'm not sure how it could be deployed in practice, but the notion that before you do this there's some level of attainable, reasonable education you have to absorb first would be useful.

A 10 minute lesson before signing up for a loan that explains exactly how it works in a simplified format might make up for the systemic lack of financial education throughout formalised schooling. Might. Would certainly be interesting to see it happen/interested in helping it happen.

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