It looks like you're using an Ad Blocker.

Please white-list or disable AboveTopSecret.com in your ad-blocking tool.

Thank you.

 

Some features of ATS will be disabled while you continue to use an ad-blocker.

 

'Pay Day Loans' Exacerbate Housing Crisis

page: 1
2
<<   2 >>

log in

join
share:

posted on Mar, 25 2008 @ 02:13 PM
link   

'Pay Day Loans' Exacerbate Housing Crisis


www.reuters.com

CLEVELAND (Reuters) - As hundreds of thousands of American home owners fall behind on their mortgage payments, more people are turning to short-term loans with sky-high interest rates just to get by.

While figures are hard to come by, evidence from nonprofit credit and mortgage counselors suggests that the number of people using these so-called "pay day loans" is growing as the U.S. housing crisis deepens, a negative sign for economic recovery.

(visit the link for the full news article)




posted on Mar, 25 2008 @ 02:13 PM
link   
LMAO---EIGHT HUNDRED PERCENT INTEREST RATE?!? Welcome to the latest scam that predatory lenders are making a killing off of. People better read the damn fine print before putting the final nails in their coffins with this racket. The vultures are sweeping in, cleaning up after the scraps of destruction of the Housing and economic disasters that are destroying our nation....



A pay day loan is typically for a few hundred dollars, with a term of two weeks, and an interest rate as high as 800 percent. The average borrower ends up paying back $793 for a $325 loan, according to the Center.




www.reuters.com
(visit the link for the full news article)

[edit on 25-3-2008 by DimensionalDetective]



posted on Mar, 25 2008 @ 02:19 PM
link   
Hmm. Me an my old lady use one of these places . While they do make a buck its nothing like reported. We pay like 40$ for a 400$ loan . So we barrow $400 and pay back $440.

The first time you get a month to pay it back . After that you get the 2 weeks .
I have to admit that it sucks to have to use them. But we dont believe in credit cards. Neither of us have ever had one . And never will .

I hope people are not really paying these prices. If they are its a real shame . :/


Just my 2c on the subject ..



posted on Mar, 25 2008 @ 02:25 PM
link   
Watch what you sign!

The people that get these payday loans are the same ones who signed the papers for ARM's or who lied about their income on their loan papers or who bought houses without disclosing their income that any thinking person would know they could not afford. People who traditionally have never and should never own homes.

Of course, I work with a guy who saved his house with a payday loan when his kid got hurt. He took out a payday loan to make up the difference on his mortgage that he was short, paid the loan on time and it cost him only $50. If you are responsible you can use these services without trouble. Costs less than an overdraft fee in most cases.

This is not about loan sharks so much as it is about the rampant fiscal irresponsibility of the average American. Most people don't even balance their checkbooks let alone know how. They do not teach personal finance in the government indoctrination institutions and it shows. The prol's will starve and suffer and than turn on those who take advantage of them. God bless the ignorant masses because they will fuel the Revolution!!!

[edit on 25-3-2008 by Tinhatman]



posted on Mar, 25 2008 @ 02:41 PM
link   
reply to post by oLDWoRLDDiSoRDeR
 


On average its 125%-900% on these loans if they are not paid back on time. For instance, if you borrow $400 for two weeks and don't pay that back in two weeks you pay an interest on your interest.. an insane amount.. these institutions claim that such a high interest rate will incite people to pay back their debts, and that few ever have to pay that high of an interest rate for to long..

But 800% on $400 for even one day will be nearly impossible to pay back for someone who had to take one of these loans out to begin with.

The other MAJOR problem with these insitutions is they are very.. very picky on where they put up shop.

They prefer poor neighborhoods and especially military bases.

I live by an Air Force base and I can count at least 5 of these stores within a 5 miles radius.

They are not breaking a law though.. because its in the contract that no one ever reads, or maybe many think they can pay it back but can't.



posted on Mar, 25 2008 @ 02:41 PM
link   
Payday loans are expensive but are within reason if you pay it back on time. It is those who do not pay it back that end up with these ludicrous rates. As far as it exacerbating the housing crisis, that is just plain ridiculous. I would guess that no more than 1-2% of those getting these loans are actually homeowners.



posted on Mar, 25 2008 @ 02:45 PM
link   
I don't see this as making the housing situation worse either.. if you can't live week to week without sing these loans you most likely don't even own a house.

And the way I understand these loan centers, though I have never used one so I have never read the contract, is that you pay 10% for instance on a loan, and you don't pay it back, you actually pay interest on your interest.. for instance, 800% of the 10% amount. Still crazy amounts of money taken in interest but not 800% of the face amount on the loan.



posted on Mar, 25 2008 @ 02:52 PM
link   
I have to ask, if there are more pay day lenders than the combined number of McDonald's, Burger King and Wendy's franchise outlets in Ohio (and presumably a significant number in other states) where is the financial backing coming from?

I ask because here in the UK, if your mortgage application to a high street bank is rejected, they'll try to get you 'cleared' through a sub-prime subsidiary of said bank - of course, at greatly inflated rates.

So are these pay day lenders being backed by the banks?



posted on Mar, 25 2008 @ 02:58 PM
link   
Most payday lenders are usually regional and some are nationwide. They are set up in shops that actually look quite a bit like a fast food chain. I am sure if you were to look into who owns these corporations you would find they are subsidiaries of larger financial corporations. Some are even publicly traded !!!!

Or if you look at the few privateley owned companies you have people who borrow from banks to loan to the poor. Kind of like how the federal reserve loans to banks who loan to banks who loan to people who pay the loan back with intrest than the banks pay each other back with lower intrest until it's back at the fed. It's a giant Ponzi scheme.



posted on Mar, 25 2008 @ 02:58 PM
link   

Originally posted by oLDWoRLDDiSoRDeR
Hmm. Me an my old lady use one of these places . While they do make a buck its nothing like reported. We pay like 40$ for a 400$ loan . So we barrow $400 and pay back $440.

The first time you get a month to pay it back . After that you get the 2 weeks .


What you've stated here is already nearing the rates mentioned in the article. They're charging you 10% for a 1 month loan. If you multiply that out for 12 months, you get 314% interest per year on your first loan. If it's 10% in 2 weeks as you stated for future loans, it multiplies out to 985% interest per year.

Using these rates, your $400 loan would go up to $1255 in one year if you didn't pay it off. On consecutive loans, that $400 would turn into $3940 in one year.

They should be throwing these people in jail for usury. I guess they must get around it by using the word "fee" instead of interest. I just did a quick search out of curiousity and it appears that in my home state (Pennsylvania), 25% is the maximum interest rate that can be charged or it's criminal usury.



posted on Mar, 25 2008 @ 03:05 PM
link   
Traditionally it could only be crime if the lenders used force or fraud to trick people into these loans. If they sign willingly well tough titty.

For every crackhead or drug addict or ignorant irresponsible twit who gets caught up in the payday lending system for a year I am sure you have another person who uses it as a tool in the manner specified and gets themselves out of a sticky situation. How many people are "saved" by being able to tak an emergency loan. And really, how different is this from overdraft fees on a checking account at a "real" bank?

Good crunching on the numbers by the way. It's nice to see people who can understand how intrest on these things work.

Also, all lending that applies intrest is technically usury. It is outlawed by the Muslims and was outlawed by the Catholics until the reformation. Organized religion got one single thing right!

[edit on 25-3-2008 by Tinhatman]



posted on Mar, 25 2008 @ 03:20 PM
link   

Originally posted by Rockpuck
reply to post by oLDWoRLDDiSoRDeR
 


On average its 125%-900% on these loans if they are not paid back on time. For instance, if you borrow $400 for two weeks and don't pay that back in two weeks you pay an interest on your interest.. an insane amount.. these institutions claim that such a high interest rate will incite people to pay back their debts, and that few ever have to pay that high of an interest rate for to long..

But 800% on $400 for even one day will be nearly impossible to pay back for someone who had to take one of these loans out to begin with.

The other MAJOR problem with these insitutions is they are very.. very picky on where they put up shop.

They prefer poor neighborhoods and especially military bases.

I live by an Air Force base and I can count at least 5 of these stores within a 5 miles radius.

They are not breaking a law though.. because its in the contract that no one ever reads, or maybe many think they can pay it back but can't.


Not exactly true . I have got one and needed extra time to pay it back . They put us on a payment plan and it only cost like 15$ extra. I dont know where these figures are coming from . .

Like i said tho . If people are paying this amount . Its sad. Cause i have had nothing but good experiences with these places .

I'm definitely not defending ones that may have shady tactics .. Just saying that in my experience these places (one i have used) definitely have a use.

Btw. We only use it every now and then . And would never take a year to pay it back . Mostly use it when the paycheck comes after the first and the bills come on the first. . . Like has been said . If you cant pay back the loan . You had problems to begin with . I don't think that you can attribute the problem to the lenders . No matter how crappy it may be to need to use one.
(Once again I'm not defending just stating personal experience)

[edit on 25-3-2008 by oLDWoRLDDiSoRDeR]



posted on Mar, 25 2008 @ 03:25 PM
link   
You may be lucky. The report is not saying every single place offering these loans are evil loan sharks.. they are saying that once the need was discovered, it has been exploited widely..



posted on Mar, 25 2008 @ 03:28 PM
link   
reply to post by BlueTriangle
 


I don't think you have that right at all..

The way I understand is its interest on your interest.

If you borrow $100 at 10% you pay $10 back in interest at 2 weeks.. a total of $110. If you miss your payment its not 800% of $100 its 800% of $10.. which is obviously a huge difference. Instead of $800 in back funds it is $80..

It is essentially 80% interest at this point, after paying interest on the interest you borrowed. A lot less then 800% of the face value though.

Still fraudulent if you ask me though.

EDIT:
(though trust me... 800% is actually a far better deal then over drafting your account, which depending on your bank is fradulent as well. One account I use an over draft of .01$ or more is $52 per transaction including backed and pending transactions. The other account I use from the local credit union is $35 for .01$ and over on every transaction including pending transactions.

Then both accounts have an equal $20 a day fee for negative ballances. The average person over drafting a total of $100 will do so in about 10-15 transactions, or roughly $500 in fines and penalties before they can repay it by pay day.. 100's of percentage points on the face value of debtness to the bank, much higher then predatory lenders..

So whos the REAL predator?

As a college student, I do not know of a SINGLE person who HAS NOT over drafted their account at least once. Each time they got screwed by the banks, and each time, including my self, owed the bank hundreds of dollars on transactions that totaled $2-5 per transaction.

[edit on 3/25/2008 by Rockpuck]



posted on Mar, 25 2008 @ 03:31 PM
link   
reply to post by Rockpuck
 


Oh i know . But i use these places instead of credit cards . The interest rate actually comes out allot better (For me anyway). With a CC i would be paying back at least 100$ on 400 especially at the minimum payments they like to try to get you to pay.

Like anything . If used responsibly you shouldn't have a problem . I mean how many of you are paying out the nose on your CC payments?

I guess i just may be lucky and here in Michigan we got a few good loan places .
The great part is they all offer "introductory deals" like "Dont pay for a month on first loan"

Now with there being one of these joints on every corner . You can just go from place to place every month and get the month loan or the "special" And actualy get ahead without the hassle of a CC...

Once again . Just my experience . And i feel for the people that need these places to survive..



posted on Mar, 25 2008 @ 03:32 PM
link   
reply to post by Rockpuck
 


Now add the intrest on that $80 and the additional for every period you are late. Your assuming they pay it back after that intial intrest is accrued. Keep going and you get the numbers that these people are complainign about. These dead beats are taking 12+ months to pay back a 2 week laon that has compounding intrest once it is late.

Forgiv me, my tiping is terrible tooda.


[edit on 25-3-2008 by Tinhatman]



posted on Mar, 25 2008 @ 03:40 PM
link   
reply to post by Tinhatman
 


I know. I was oulining what is SUPPOSED to happen.. these instituations are saying that this is supposed to make people want to pay back the loan. Most don't. So yes, you incure massive interest on the interest, when compounded, = your # royally.. They should be used as an absolute last resort.

IMO, they, and the banks, need tougher restrictions, if you read what I edited on my post above.



posted on Mar, 25 2008 @ 03:45 PM
link   
reply to post by oLDWoRLDDiSoRDeR
 




And i feel for the people that need these places to survive..


Which is why I hate banks of all kinds with a passion.. desperate people backed into a corner who may not have the intelligence or know how to find a better way to deal with their problems..

Its preying on weakend and demoralized people, often in the toughest times of their lives.. exploiting the weak for quick cash when out of desperation have no alternative then to roll over and let the bank rape their financial livelyhood.

Then the long lasting effects on your credit will haunt you for years after this .. a rating system that your not allowed to know how it opperates, and a number that a bank places with your name to say how much your worth, if you can be trusted, or worthy of doing business with.

If that is not the Mark of the Beast, I don't know what is..

There is no greater evil than the banking industry.. why we let them breath another day is beyond me..

[edit on 3/25/2008 by Rockpuck]



posted on Mar, 25 2008 @ 03:57 PM
link   
Yeah, to put it as eloquently as I can, Bank's suck.
We can sleep better knowing it will all be over soon.



posted on Mar, 25 2008 @ 04:18 PM
link   
reply to post by Tinhatman
 


Cant argue with that . It must have been nice to live when working for something felt rewarding . And not like you were lining the pockets of someone else.



new topics

top topics



 
2
<<   2 >>

log in

join