Payday Loan Companies - Useful Facility or Scourge on Society

I am not sure if this kind of practice happens anywhere but the UK and the USA but I thought it be worthy of a bit of scrutiny. Here in the UK you can attain short term loans from £100 all the way up to £1500 even when you are turned down for conventional credit due to financial difficulties. These companies offer you a facility to get money into your bank account within 15 minutes providing you promise to let them take it back plus interest on your next payday. The interest rates vary from 1734% all the way up to 5767% APR.

www.whichpaydaylender.co.uk...

My issue with these companies, even if you ignore their interest rates for now is that they are clearly capitalising on people already living in poverty. Now this practice may not be illigal but morally this is not right. There are of course people who use these companies responsibly but in general those that use them are already in a desperate situation.

The governments of our nations are not protecting its people from organisations like this and many end up being chased for debts they cannot afford to pay causing stress and unnecessary hardship for families that should never have been lent the money in the first place.

My question is, do these companies hold a legitimate use in society or are they just part of the machine keeping the poor, well poor?

Scourge!!!

Anytime I have needed them, they have been more trouble than they are worth, and I end up pissed off and leaving without any money.

For the people that do use them, it becomes a never-ending cycle as they get in deeper and deeper.

They should be outlawed, they are loansharks, and they damage the society.

Use then carefully. A few years ago when my lifw went south so to say in 48 hours i used them to get back on my feet. I got a good job borrowed 1/2 my check and paid that ammount all on a bill. The next week did the same. The interest was $85 each time but the credit card interest was in the big picture much more. by paying them off i cut down nearly 100$k in debt in 2 years. I haven't been back in 4 years now. Just need to have a plan and stick with it

reply to post by getreadyalready


I am inclined to agree with you I just wanted to add a balanced argument to begin with. Their only defence is that if they were made illigal, people may turn to loan sharks but in my opinion that is not an acceptable reason to keep them legal and destroying peoples lives.

In my opinion credit could easily be replaced with the word slave.

I've never needed nor used their 'services', just always considered them as a sort of Paycheck Pawn Shop.

Kind of like the naval seamen who would never spend/buy anything or even leave the ship while in port, but they'd gladly give you a fifty today in exchange for 80 come payday.

reply to post by michael1983l

The governments of our nations are not protecting its people from organisations like this and many end up being chased for debts they cannot afford to pay causing stress and unnecessary hardship for families that should never have been lent the money in the first place.
My question is, do these companies hold a legitimate use in society or are they just part of the machine keeping the poor, well poor?

That's why it was called USURY in the bible.

They do serve a purpose but due to the nature of the loans the Lenders should not be able to take advantage of that fact by demanding insanely high interest rates. Their should exist some limitations.

Because it essentially allows the lender to essentially own someone and their assets akin to a Slave simply via the accumulation of interest and penalties which is really no different than relieving someone of their property by putting a pistol in their face and demanding it.

Peace

I am going to have to go with Scourge. I had a friend who utilized them to keep from having her car repossessed. Next thing you knew she was forced to get more loans just to eat because they were literally taking money she didn't have and leaving her account 100's of dollars in the negative as they tried to collect daily. Eventually I called the Attorney General's office in Washington to find out if there was anything we could do. They advised me the best course of action was to close the accounts and just start over. They said that she had already paid them back 3 times what was owed and while it might tarnish her credit it was better then where she was. So that is what she did.

For the most part, yes, they are bad IMO. But as you yourself said, there are people who use the service responsibly and get themselves out of debt. Here in the U.S., Phoenix Az. for example, the big issue isn't whether they should be outlawed but where new facilities should be built. The better neighborhoods of town don't want them becasue of the types of people places like this typically attract.

Call it a coincidence all you want, but the poorest parts of any big town are going to have the largest concentration of liquor stores and check cashing facilities. That's just the way it is, and until people in these neighborhoods stop using them, that's the way it's going to be. Nobody is putting a gun to these peoples' heads and demanding that they use them. They choose to. It's called supply and demand. And I personally don't believe the government should have any say in the regulation of these facilities if the money that is in them is not federally insured.

Excuse the pun....but that's my 2 cents.

Originally posted by nh_ee
reply to post by michael1983l

 

The governments of our nations are not protecting its people from organisations like this and many end up being chased for debts they cannot afford to pay causing stress and unnecessary hardship for families that should never have been lent the money in the first place.
My question is, do these companies hold a legitimate use in society or are they just part of the machine keeping the poor, well poor?

That's why it was called USURY in the bible.

They do serve a purpose but due to the nature of the loans the Lenders should not be able to take advantage of that fact by demanding insanely high interest rates. Their should exist some limitations.

Because it essentially allows the lender to essentially own someone and their assets akin to a Slave simply via the accumulation of interest and penalties which is really no different than relieving someone of their property by putting a pistol in their face and demanding it.

Peace

I noted last night in the State of the Union address Obama put Payday lenders on notice that there would be legislation limiting them and their interest rates.

And if you’re a mortgage lender or a payday lender or a credit card company, the days of signing people up for products they can’t afford with confusing forms and deceptive practices -- those days are over. Today, American consumers finally have a watchdog in Richard Cordray with one job:

reply to post by Taupin Desciple


I understand how these companies come about and even why they exist. However we have to look at the overall affect on society it has in general and wether that is worth the cost for the smaller percentage who use these facilities responsibly. My opinion is that these companies know that the borrower will likely default when they take out the loan and also we know that desperate people will do desperate things to get some money, be it for their kids, gas, mortgage payment or even alcohol or drugs. The very fact that these companies will lend to almost anybody and the fact that there are people out there that feel they have no other option but to use these facilities makes for a very dangerous combination.

At minimum, I think interest charges should be capped as well as size of loan and no individual should be allowed anymore than one short term loan at any one time accross all providers.

Otherwise an outright outlaw.

Ready for this story?

I Had just came back to work from Maternity Leave. I was about $400 Short on bills, as I missed 1 week pay. I took a loan out.. The Terms where that I could A. Pay them up front on my next pay the total +Interest OR B. I could pay $89 and the go back the next pay and decide again. Not ever 24 Hours after receiving my money, I started getting these weird phone calls. I was at Softball Practice and when I came in from the field I had a Voice mail so I listened to it,

“This is Tom Anderson (Sure didn’t sound like a Tom Anderson to me!) I’m calling regarding the 100 Day PayDay Loan you took out, you are late on your payment and we will be taken the necessary actions to re-collect what is ours. You have 48 hours to have your lawyer contact us please be advised you will be served with papers in the next 24 hours, if your lawyer does not contact us we will collect what is ours Good Luck, God Bless and may your future endeavors be wise, for your children’s sake.”

HOLD THE #&@ UP!? I was freaking the hell out, so I had my “Lawyer Call” the second I hung the phone up, They said I had already exhausted my time allowance and to expect collection to be made. To sum the rest of the story up, I was threatened 10 more times by this “Collection” company, when I was not in Collections with the Loan Company as my loan wasn’t even a week old! I had taken it to the Local FBI, as the calls were becoming more persistent and the one person told me my address.

They are #ing SCAMS! Even though in the contract it says they wont sell your number, they still do! Please NEVER Do this. Unless you are ready for the crazy-ness that comes with it!

reply to post by Britx


Wow that sounds like the US is even more poorly regualted than the UK and I thought we had it bad. However you raise a very valid point, they do sell your details on even if you specifically request them not to do so. I know this as I applied using a brand new telephone number, I made sure I ticked the box stating my details not to be shared and low and behold, within the hour I had around 6 text messages and 2 calls from companies trying to sell me stuff.

I vote scourge. Once most people are in it is extremely difficult to get out. I've never used them and never will even though things are extremely tough right now.

I consider them the same as the old practice of floating checks - writing a check at one store to pick up a hot check at another store. Its vicious cycle that is hard to get out of.

I'd never use one. If they're being deceptive and predatory, they need to go. If they're not, well, I mean, it's up to the consumer in the end to decide whether they're making a wise decision about their purchases. Read, read and read and never get anything without something firm in writing. But these places are like spam and junk mail and belong in the trash, imo.

You can always negotiate with your bills for a payment plan. Not always with all things like credit cards or regular bank loans but for utilities and such, you can.

reply to post by TXTriker


I'm with you on that after my friend's experience I don't care how tough things are I will never take a payday loan in my life. I don't care if it's the difference between being kicked out of my apt or not. Of course I have a bit of help there as well as my state actually outlawed Payday lenders lol, so you can't even take one if you tried. I am more then sure there are ways around that but I would never seek them.

As long as you are very, very careful about how often you use them... Remember they charge outrageous interest for the privilege of borrowing money from them... Eventually you are going to be on the losing side of the equation.

Carefully, carefully.

Given that Pawning & Prostitution are 2 of the oldest professions,
Pawning is no different than cash advances.

Those have been part of society since currency was established.

reply to post by michael1983l


I agree with you 100%. It always seems to be the less educated among us who use those services, and the owners know this but don't care. They're willing to make a buck at someone elses' expense and, if anything, it's morally reprehensible.

There should be more regulation, I agree, but it shouldn't come from the federal government as they don't insure the cash that is on the property. It should be up to the local municipalities to put a cap on the interest rates because these places have a direct effect on the local economy.

Originally posted by seagull
As long as you are very, very careful about how often you use them... Remember they charge outrageous interest for the privilege of borrowing money from them... Eventually you are going to be on the losing side of the equation.

Carefully, carefully.

Kinda like Vegas huh?

It's not set up for YOU to win.

reply to post by Taupin Desciple


Exactly!

I hadn't looked at it that way, but the analogy works...

They want you to come through the door thinking "free money", when it's nothing of the sort. The interest is staggering.