Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Online installment loans have taken the subprime market by storm

bloomberg.com

Post reply on HN
Print view View original

261–270 of 329 posts

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

#261

Post by snagglegaggle »

papln wrote: post #40
notus wrote: post #2

I feel like the government should be offering some type of non predatory debt relief comparable to this. This service is only a detriment to the borrower due to the crazy high interest rates, but I think the government could break even with much more reasonable interest rates, consumers would be better off financially, and the predatory industries would disappear since they can't compete.

The solution to bad credit can't be more credit -- people will (and do) just take the credit, waste it, and then seek more credit. A better solution is to allow discharge of private debt so that lenders put more effort into validating debtors. If a creditor want to get money back from a debtor, they need to put the effort in to validate that the debtor has sufficient assets to pay it back and isn't paycheck-to-payche…

No debt besides student loans is truly undischargeable. Historically it seems like it was pretty easy to avoid paying, for better or wose; unfortunately, now judges are more likely to set up unreasonable payment plans and to hold people in contempt for being unable to meet those plans.

That this has not received more attention is troubling -- debtors prisons are illegal, and this is de facto creating a debtors prison. And that is often the only legal test required. That no one who can change the situation cares is indicative of societal rot.

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

#262

Post by jonfw »

philipov wrote: post #66
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).

How about paying people more? That's pretty actionable. Jeff Bezos doesn't need 100 billion dollars. "Just get rid of unexpected expenses" is the one that sounds ridiculous to me.

I think you, I, and even Bezos would agree that he doesn't need 100 billion. Which is why he doesn't have anywhere near 100 billion dollars. He has ownership stakes in companies that have been estimated to be worth 100 billion dollars (it would be impossible to liquidate for anywhere near that valuation in practice, however)

Net worth is not the same as resource allocation. This isn't the 1500s where you could plunder a castle and pillage their stores of grain. Bezo's net worth has very little to do with the distribution of housing, food, and medical care to poor people.

Does he consume more housing, food, and medical care than average? Absolutely. Are his consumption levels even remotely similar to his absurd net worth? Absolutely not.

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

#263

Post by Aperocky »

xwolfi wrote: post #259
colechristensen wrote: post #245

Earlier quoted context omitted.

80% of people live "paycheck to paycheck" whatever exactly that means. (count me among them) Very few of them actually need to. It is possible at any income level to spend less money than you make. People don't tend to make those choices though and unfortunately prices reflect this - for a lot of things, especially housing, prices rise to whatever people will pay – if everyone is willing to pay so much for housing th…

This is a very american thing. I'm french and live in China, what you're describing is really foreign to me. I'd say "most people" save a lot for retirement and their first house buy, "most people" live way below their salary max, "most people" would slap you for considering a consumer loan. What happened to you guys to go so deep in the hellhole to not even see it's madness to live that way...

The culture is really different, and frankly, it's not a clear cut 'this is simply better' thing. China had trouble expanding their domestic market because people just save the money they earned instead of spending it on things.

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

#264

Post by SkyBelow »

chasd00 wrote: post #125
adamredwoods wrote: post #70

Earlier quoted context omitted.

Peer-to-peer unsecured micro-loans at low interest rates, instead of GoFundMe.

an unsecured loan at a low interest rate doesn't make sense.

I'm assuming the person involved knows of such micro loans and hasn't fully considered the costs and benefits that went into making them. I've covered for others before knowing I wouldn't get fully reimbursed because maintaining the relationship is worth the few dollars I lose a few times a year. Interest free unsecured micro loans which often aren't even paid back in full.

But I wouldn't scale this up. I would lose more money and wouldn't be benefiting any existing relationships by doing so. The social benefit of the few dollars lost does not scale, and thus the reasoning behind existing unsecured microloans to friends does not scale.

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

#265

Post by Aperocky »

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…

I really appreciate this analogy - it's a new way to look at things and it probably is right.

I like playing real time RTS games and if I'm not spending everything (i.e have a lot of villagers and spend resources) it means I'm not optimizing enough. In real life, that is sort of where I am now.

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

#266

Post by Aperocky »

mumblemumble wrote: post #56
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…

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…

And once people realize that and begin to change the consumer culture, that's when the next market crash happen and 10% of all workers get laid off.

Saving is opposite of spending, when a lot of people spend less, they'll also earn less, some more disproportionately, this cycle continues until its a great depression.

You can start from a high saving society to a high spending society and enjoy years of boom, or you can jump of a cliff - 70% of US economy is consumer spending, as in, most everyone's salary is supported by that. You can't save when you are jobless.

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

#267

Post by simonh »

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…

I realise some people are in a really tough place, but if someone can afford the extra expense of paying off the loan, from their current income, then they could have afforded the expense of saving the same amount.

Unless their income literally increased by the amount of the loan cost, just before the additional expense hit them, the situation was avoidable. The fact is a lot of people on low incomes do not see any benefit from savings and don’t prioritise it.

That might be for rational reasons, their life circumstances are different from mine, but I don’t understand the logic. A branch of my family are significantly less wealthy than mine. When my uncle, the main breadwinner retired, his sons blew a big chunk of the retirement lump sum on luxury holidays for their families, of the sort my branch of the family would never consider. I think one of them has a mortgage and the others rent. It’s just bizzare. So many decisions they make in their lives seem actively self harming, but they do have jobs and support their families. They’re by no means destitute, but seem to actively avoid choices that could improve their lives. There’s something going on and I don’t know what it is. Maybe a lack of hope, leading to living in the moment? I don’t know.

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

#268

Post by apta »

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…

It also might be worth looking at setting up funds for people to take interest free loans for emergencies. They can set up a collateral in return to ensure payment.

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

#269

Post by colechristensen »

xwolfi wrote: post #259
colechristensen wrote: post #245

Earlier quoted context omitted.

80% of people live "paycheck to paycheck" whatever exactly that means. (count me among them) Very few of them actually need to. It is possible at any income level to spend less money than you make. People don't tend to make those choices though and unfortunately prices reflect this - for a lot of things, especially housing, prices rise to whatever people will pay – if everyone is willing to pay so much for housing th…

This is a very american thing. I'm french and live in China, what you're describing is really foreign to me. I'd say "most people" save a lot for retirement and their first house buy, "most people" live way below their salary max, "most people" would slap you for considering a consumer loan. What happened to you guys to go so deep in the hellhole to not even see it's madness to live that way...

Looking at the numbers, it seems French household debt to income has actually surpassed American (both around the 100% of disposable income) in just the last few years. French ratios have been gradually increasing for the last 25 years and American has been falling for the last decade.

One factor is Americans have significantly higher disposable income and can service more debt.

https://data.oecd.org/hha/household-debt.htm#indicator-chart

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

#270

Post by colechristensen »

Aperocky wrote: post #263
xwolfi wrote: post #259

Earlier quoted context omitted.

This is a very american thing. I'm french and live in China, what you're describing is really foreign to me. I'd say "most people" save a lot for retirement and their first house buy, "most people" live way below their salary max, "most people" would slap you for considering a consumer loan. What happened to you guys to go so deep in the hellhole to not even see it's madness to live that way...

The culture is really different, and frankly, it's not a clear cut 'this is simply better' thing. China had trouble expanding their domestic market because people just save the money they earned instead of spending it on things.

If, in aggregate, people are saving more than they're earning, your economy is necessarily shrinking on a per-capita basis (or your central bank is injecting money into the economy and your "savings" is being inflated away). If you're not investing in some creative act, you're taking capital away from everybody else.
Post reply on HN