A hundred and fifty per cent interest in Britain.

a reply to: Aazadan

Let's just agree that everything you said was true. I don't know the exact figures but all your posts in this thread seem to reflect what I believe about this subject. So if all that is true, what is the solution? Just make it all illegal and let the demand for this go unfulfilled? Because I, for one, would really like to see these places go away.

a reply to: toms54

Some states have tried that and it doesn't work. I forget which states offhand, but a few have attempted to implement maximum APR rates of 36% per year and when they did, it put the payday loan vendors out of business. But what rose in their place was online shops with even worse interest rates than what was already in place.

The fix probably involves getting people into the banking system so they can take advantage of credit. Even something as simple as a secured line of credit based on declared possessions someone has could go a long way towards getting people out of these interest rates.

I don't think it's possible to make everyone financially responsible, but credit lines could at least make less of their money disappear.

it was not for the purpose of this thread , but i has just done a rewiew of my bank arrangements [ UK ] and interest charges :

credit card = 16% P/A

overdraft [ pre aproved ] = 06% P/A [ if below £100 ]

overdraft to limit ( £600 ) = 14% P/A

as my credit card = only £400 limit - and used only for purcheases online where i cannot use paypall or my debit card [ or stuffs i WANT the protection of credit card terms ] - i am informed i can get a slightly lower rate .

YMMV

originally posted by: AngryCymraeg
Can someone please translate this? I'm British and it appears to be some kind of bizarre, fact-free, rant.

One of the great posts of our time.

originally posted by: Aazadan
a reply to: toms54

Some states have tried that and it doesn't work. I forget which states offhand, but a few have attempted to implement maximum APR rates of 36% per year and when they did, it put the payday loan vendors out of business. But what rose in their place was online shops with even worse interest rates than what was already in place.

The fix probably involves getting people into the banking system so they can take advantage of credit. Even something as simple as a secured line of credit based on declared possessions someone has could go a long way towards getting people out of these interest rates.

I don't think it's possible to make everyone financially responsible, but credit lines could at least make less of their money disappear.

It is quite easy to get into the banking system... the problem is once you screw up, it is very difficult to continue to access credit.

There are secured credit cards. You put up like $500 bucks and the card allows you to use credit up to that amount. Some people take out "title loans". These are loans typically secured by your car title, so if you don't pay the loan back, the loan company can come after the car.

People use payday loans because it is the last resort.

It would be extremely easy for a church or community group to offer low rate personal loans, but they don't. Why?

originally posted by: Edumakated
There are secured credit cards. You put up like $500 bucks and the card allows you to use credit up to that amount. Some people take out "title loans". These are loans typically secured by your car title, so if you don't pay the loan back, the loan company can come after the car.

The people we're talking about rarely have the funds to put up in a secured card in the first place. That's why I'm suggesting they can put their property up to secure a credit line. Lots of these people often have property, sometimes even nice property that can be secured.

Title loans fulfill this to an extent, but car titles aren't the greatest thing to be putting up because if someone loses their car, they lose their ability to goto work. Title loans on things like jewelry, phones, etc seems to me like it would make much more sense.

It would be extremely easy for a church or community group to offer low rate personal loans, but they don't. Why?

Would it? I honestly don't know the laws in this realm. I do know that community reinvestment is popular in Muslim banking, but they're mainly interested in investments that will recover money. Personal loans have very different repayment expectations than business loans (which also go towards buying equipment that serves as collateral).

Even changing overdraft laws to something like allowing accounts to go $500 into the red and capping overdraft fees at $5 per transaction to a max of 10% of purchase would be a significantly better deal. And also be something the banks could actually swing because their revenue is diversified unlike payday loan vendors that only offer a single narrow line of loans.

a reply to: ignorant_ape

If I remember correctly, it's from payday to next payday...I think.

It's been years since I last used one. I'm sure it's fairly similar in GB, though maybe not.

originally posted by: toms54
a reply to: Aazadan

Let's just agree that everything you said was true. I don't know the exact figures but all your posts in this thread seem to reflect what I believe about this subject. So if all that is true, what is the solution? Just make it all illegal and let the demand for this go unfulfilled? Because I, for one, would really like to see these places go away.

The only thing I'm left to say is that they work for some people. A contract is agreed without the hidden charges that banks sometimes put onto people.

originally posted by: Wide-Eyes
The only thing I'm left to say is that they work for some people. A contract is agreed without the hidden charges that banks sometimes put onto people.

Banks make it expensive to be poor. Payday lenders make it even more expensive.

The best solution is responsible credit management. I realize that some people will mess up, but it's also a lot less expensive for those that don't.

For many people pay day loans might end up being a trap since there is high potential for abuse.
I've had to use risky cash borrowing schemes twice to settle cash only real estate auctions, so am grateful that they exist.
The interest charged is tiny compared to typical real estate closing costs with a bank for example.