Payday Loan Companies - Useful Facility or Scourge on Society

reply to post by seagull

Originally posted by seagull
Eventually you are going to be on the losing side of the equation.

You are always going to be on the losing side with these companies and the banks. It is nothing more than legalised loan-sharking!

Best bet is to join a credit union and help yourself and other CU users stay away from these rip off merchants who should all be shot.

In the UK you cannot do this anymore, the Cheque guarantee system has been scrapped and you have to wait 5 days for the cheque to clear before you get the funds. As your cheque will never clear you will never have any funds.

reply to post by getreadyalready
was this not called loan sharking back in the day, now it is called credit building ,I call slave entrapment, for you become a slave to them to pay back the loan, and never get out of debt. never will nor will i get a loan from them.

I don't think they are necessarily wrong, but I think that the interest rates that they are allowed to give are simply unreasonable.

Yes, they loan to people that no one else will give credit to, but I still don't think it's okay to let them rape and pillage people financially.

If a private person did that, people would be wanting him chucked in jail as a loan shark. But, for some reason, it suddenly becomes perfectly okay if this person rents an office, hires a few people, and calls himself a business. Then, if you think it's wrong, you're an anti-capitalist baby-eating commie.

the adverts on uk tv.... person scratching their head with a pile of bills on the kitchen table. colour is gloomy. desperate look on their face. partner/friend walks in and suggests payday company and all of a sudden... happy days, clouds have gone and everything is shiney again.. wonderful stuff.
personally i will avoid this like marbug having heard these issues on watchdog-like-programmes where once money is flowing, temptation is perpetual to pay back on the drip.
i'm wondering if the street loan sharks are more competitive.
f.

I’m afraid you are not looking at the entire picture.
These people are at the bottom rungs of society. They own nothing. They have no money and therefore do not have a bank account. There is just no real reason for the consumer to pay back the money. So likely the default rate is close to 30-50%.
Now where does Payday loan turn to collect? Phone calls. That’s the only option they have.

In my area they capped the rates at 28% and most of the Payday places closed up. There was just no profit left. Did it help the poverty rate? Nope. In fact they fired their employees. So you could say it hurt the overall economy.
I would expect that if you are a good customer who has paid back a couple of times they would lower your rate a bit just to keep you coming back.

Most of the people that use these services have a history of making bad decisions. So preventing them from going to a payday place is not going to make their lives any better. In fact it may be the difference in them fixing their car so they can keep a job vs losing the job entirely.

You can’t cure stupid.

Scourge for sure. My wife spent a short amount of time working for one of these places. There were plenty of stories about people coming in there that were on a perpetual cycle of "borrowing". Some of these folks were well into a year or more of continuous loans. Even though the interest rates were insanely high, they were living paycheck to paycheck, got into some kind of bind, and took out a loan. Then when the next paycheck came, they could only afford to pay the minimum amount, making their total amount paid for the term of the loan exponentially more than what they had originally borrowed.

She later found out that many of these people were "borrowing" from several different places at once, using one loan to help pay for another.

Fortunately, the state of Colorado has and continues to change laws regarding these type of businesses. It appears as if they are trying to make it so difficult to continue business that they run them out of the state, which I think is a great idea.

Say you have a $ 1000 savings and some borrower is asking you to lend him/her $ 40 for an hour .

Your have choices .

Say that you have agreed to lend the money for an hour and the borrower has no colletaral to secure the risk .

In other words all you have is the " word " of the borrower to offset the risk of losing $ 40 .

Say the borrower actually is an honest human being and have every intention of paying you back within an hour .

An hour has passed and borrower turned up with the money and paid you back .

In this scenario , how much interest would you charge to your borrower ?

reply to post by 23432


i guess getting banjoed by a bus on the way back to repay the loan could be seen as a risk factor in this scenario then i doubt the money would be recovered without further expense to the borrowee (word?)/lendee! and then it's only the lenders word that there is a debt. i also suspect many on here lent money to someone they knew and never got it back, myself included. fairer system would be 'hold my ipad till i come back'.

i personally know a couple who have full time jobs, very good wages and yet a week before the monthly salaries come in, they are skint and miserable. they used the payday chaps at least one time i know of after maxing the credit card overdrafts. all branded kit, expensive lifestyle blah blah. monthly multiple direct debts may seem small when looking at them individually but when added up together, hmm.

i'm also wondering if anyone has ever been refused a payday loan. that would be interesting to read.
f

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