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FreddyB 07/07/2010 11:20:00 AM
http://usepaydayloans.com/blog/good-payday-loan-lenders-deserve-unbiased-attitude.html
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pablo 07/01/2008 1:26:00 AM
i work for a collection agency, and most of our work is for payday lenders. people forget one thing when railing against payday lenders: these companies provide an OPTION for people who otherwise would LACK any options. somebody tell me again how somebody making $30,000/yr. with poor credit is going to qualify for a small loan? SO...take this option away and who's going to step in and fill that void?
don't bother, i'll answer for you--the BANKS will operate as de facto payday lenders. what they are looking for, and this is why the bank lobby is SO OPPOSED to payday loans, is a MONOPOLY on all forms of lending if at all possible. that's why the mortgage meltdown is so karmically sweet to me, as it effects banks...they DESERVE to have their lunch handed to them...they aren't riding in on the white horse to save the illiterate masses the way they make it SOUND, that's for sure.
and i love how legislators and "consumer activists" make the elitist assumption that it is THEIR lot of do the THINKING for all these poor people, our minorities and the financially strapped...THEY are going to make the decisions FOR them, removing all CHOICE from the matter. fact of the matter is that payday loans are a FAR better option than "overdraft protection." people just need to understand that these companies cannot be expected to operate for ZERO PROFIT. they don't make NEARLY as much money off the hardship of their customers as BANKS do, with all the overdraft fees and extra finance charges for high-interest credit cards (do the APR work on THOSE...i DARE YOU! that's why they've gotten the legislators to EXCLUDE those calculations from APR laws). '
the problem payday lenders have is that they are REQUIRED to list APR when their business model does NOT OPERATE USING THAT COMPUTATION. IT'S A FLAT FEE, NOTHING MORE!!! a ONE-TIME flat fee. granted, when they were doing rollovers it could easily turn into something different...but that is a CHOICE. there will ALWAYS be loopholes that can be exploited...some are more painful than others. taking out loan after loan is one such loophole, and yet it's not the lenders that CAUSE the borrowers to take the next loan, and the next one. i feel for these people, but it's more than likely that they would start having basic services cut off...phone, electricity, gas, etc. better to pay some extra finance charges than to have that happen, use the loans to stave it off until tax time...
okay, my apologies for such a long post. i have a LONG history of work in this industry.
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Christal Wood 03/26/2008 8:03:00 AM
O.k., DoTheMath, (not that anyone's reading at this point) all swearing aside, it's true that "legit" financial institutions do their own robbery. What is so slimy about "payday loans" is that they are not considered lending institutions under law, and thus are not held to the same usury standard in terms of interest. That is not to say that other types of fees aren't just as illogical or wrong.
Your point #1 is incorrect. There is no misunderstanding The APR cap for "check cashing" companies is not the same as for lending institutions.
Point #2 is also incorrect, many folks use check-cashing places because they can no longer hold checking/savings accounts, possibly because of the fee system you mentioned.
Point #3 AMEN! I agree, however, I've found the bigger problem to be that most people don't understand DPR or variable rate, or contract of adhesion. However if it's not on the WASL, and someone stands to make a buck, our kids stand a snowball's chance in hell at being taught such things. It would be practically unAmerican.
In general, it escapes me how it can be justified to any degree to charge higher rates to individuals who can least afford it. Even those who do understand the scam may feel they have no other choice. I think it's classist and just plain silly to take the attitude that people who are poor and desperate are stupid. There are many other things to consider.
The bottom line for me is that predatory behavior is predatory behavior, and should not be allowed to continue. The sad thing, is that when confronted with the question as to why these entities are allowed to continue their practices, legislators throw up their hands as if to say the lobby is just too strong. I'm proud to say that my emotions get hella riled at such ugly equations, set up by ugly, slimy people.
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Suspicious looking 03/19/2008 12:42:00 AM
I found the comments from the former Moneytree employee rather disturbing: "Some people come in to get payday loans for gambling money or drug money," he adds. Regardless of what tellers suspect about the motives, Pena says, as long as proof of a job and a bank account number are provided, a loan is forthcoming."
First of all, how would HE know that the money was for gambling or drugs? Does this guy think institutions should deny services based on what an employee "suspects"? I suspect this guy was fired from Moneytree for being an idiot!
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Gogirl 03/16/2008 8:14:00 PM
Here's how I see things shaping up:
The folks who seem to appreciate this business appear to: (1) value hearing both sides of a debate, (2) comprehend math, (3) are aware of how a checking account works, and (4) understand the economic condition and choices of the working poor.
Whereas the folks against this business seem to be fairly proficient in: (1) swearing (2) taking the Bible out of context, and (3) computer-aided fantasies centered around buying previously worn celebrity pants.
While I have as much appreciation for swearing and wearing pants as the next girl, I'm going to have to pick the first group as the stronger swimmers in the evolutionary race.
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freey 03/16/2008 7:37:00 AM
LMAO! This guy sucks. Just last month, I saw him at the millionaire club wealthychats.com selling his pants. Ya know it's a club for millionaires and celebs only, no one will be interested in his stupid pants at all.
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nic brodeur 03/15/2008 7:10:00 AM
Usury is usury, whether it is committed by Moneytree or one of our "prestigious" financial institutions. Isn't there a Biblical injuction against usury?
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Former Customer 03/14/2008 11:05:00 PM
Let's remember that many payday loan establishments actually started as a check cashing business -- a service that was greatly needed in low-income communities because traditional banks would not provide financial services -- which is why many of the payday lenders are located in communities of color.
And, finally, when your car breaks down and you won't have the money to get it fixed for a week, this short-term loan is vital to your ability to continue your employment.
Sure, there are people who get in trouble with the short-term credit but there are folks who get in over their heads with traditional credit and I don't see anyone protesting Citibank. And, MoneyTree will extend your loan if you can't pay it back when you promised without any additional fees. Will B of A give you the same courtesy?
I get tired of folks treating the working poor like children. The adults who borrow money are responsible enough to have jobs and checking accounts. Surely, they can decide if they can afford a payday loan.
I think we do need appropriate and measured regulation but nothing so absurd as to drive the payday loan people out of business. Whether we want to accept it or not, they provide a valuable service to a community that traditional financial services have abandoned.
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Jackson 03/14/2008 4:37:00 PM
I agree with you veritas.
My checking account was overdrawn $1.78 for one day and I was charged $35. Why isnt there a cap on those fees?? If banks stoped charging outrages fees, then most people would not need a payday loan.
It's sad that the government tries to distract you from the banking industries indiscrections, by focusing on payday lenders.
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Do the Math 03/13/2008 8:25:00 AM
Response to cw:
Point#1: Most people who are against payday lending do so because they do not understand how to calculate APR. I have taken out payday loans on occasion to balance my account and avoid bank fees (see later in point 2). On average, a $100 loan charges $15 over two weeks compared to a bank's charge of $35 on an overdraft on the same day of the charge (no matter how much you have overdrawn, even if it is $98.76). If you calculate the APR on the aforementioned bank's NSF it can easily topple over 10000% compared to the lesser 391% from the mentioned payday loan.
Point#2: All people taking out payday loans have bank accounts and have a job. So why don't the banks offer small loans to their OWN customers - Oh, I forgot they call that overdraft protection - and they make tons of profit AND ruin your credit rating.
Point#3: This is what our kids should be learning in school - How to Calculate APR:
APR = Annualized (as in 365 days) Percentage Rate
APR = fee charged/amount borrowed/number of days borrowed x 365 x 100
I was charged $35 NSF for a transaction of $98.76 on the same day of the purchase where number of days borrowed = 1. If you convert that to an APR, it is 12935%. Can you imagine the banks having to justify that?
lol i'm tired. it's late. learn the facts. don't be emotional about it. do the math.
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Christal Wood 03/13/2008 2:16:00 AM
That's bullsh*t!!!! You can't charge anyone over 300% interest as payday "check-cashing" companies are allowed to do in this state, and call yourself honest by any stretch of the imagination. This creates a horrible dynamic for more and more of us--not just minorities. These places should be outlawed, and the CEOs prosecuted as the usurious predatory individuals they are. -cw
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veritas 03/12/2008 7:53:00 PM
Thanks for writing a balanced article about the payday lending industry. Like any industry, there are critics of payday lending. There are also consumers who misuse the product and have buyer's remorse, like Ms. Davis, even though she says it helped her when she needed it. And there are lenders in the industry who don't positively contribute to its reputation. The same could be said of any industry.
But, most of the people in the payday loan industry and its customers are decent, honest, responsible and want to do the right thing. Mr. Bassford is one of the good guys. Congrats Seattle Weekly - you've done what others have failed to do - write a balanced piece that challenges not just the claims of the industry but those of its critics equally.
