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Do you actually know what payday lending is and what the lending rates are like? They're designed to trap people in an endless cycle of high-interest debtorship

Do you actually know what payday lending is and what the lending rates are like? They're designed to trap people in an endless cycle of high-interest debtorship.

peterhadlaw 8y ago
Yeah if you look at APRs, except what the anointed don't want you to know is that these loans are very short term, not lasting years. This is a choice you're advocating to remove from people experiencing hardships you will never understand. The reason the interest is so high is that these are high risk and high necessity markets.
- nsp 8y ago
  But the loans are designed and in 80% of cases rolled over into a sequence of short term loans, meaning that looking at the APR is not as unreasonable as it might sound for a 2 week loan. Source: CFPB study: https://files.consumerfinance.gov/f/201403_cfpb_report_payday-lending.pdf https://files.consumerfinance.gov/f/201403_cfpb_report_payda... Personal experience: I've taken out payday loans they definitely tried to steer me into rolling them over
- axaxs 8y ago
  If the interest were so high just to counterbalance the 'high risk', then lenders wouldn't be profiting the billions of dollars they are off of them. Why not just cap the APR at something less exploitative?
- blackflame7000 8y ago
  The thing is that most people who take a payday loan do so because of an emergency need such as a doctor bill, car repair, or rent shortfall. Then they are stuck because suddenly next months pay is already being spent today and its more expensive. About 85% of the traffic is repeat customers from what I observed when I built the online systems that would process these applications
- JackFr 8y ago
  The two week loan typically gets rolled multiple times, and on average end up as as in the 60 to 90 day range. Payday lenders -- because of their nearly limitless willingness to roll loans -- face default rates of around 6 percent, similar to those of credit cards. You have no idea what hardships I've faced, what my personal experience with the payday loans is or what my professional level of understanding about the industry is, so I'd prefer you not lecture me about what I will and won't understand. You can make usurious loans if you like, but don't use our courts to collect. We don't want to be part of it.
intuitionist 8y ago
Do you actually know what default rates are like for people without access to better sources of credit? The interest rates are so high because that's the only way payday lenders can make money. In states with usury laws that prohibit such high interest rates, you don't see lenders lowering their rates; you see credit for poor people dry up completely. Liz Warren does have a good solution to this, namely postal banking. (The US government can swing the losses incurred from lending small sums to high credit risks at low rates.) But just killing the payday lenders without setting up an alternative is not a good idea.

Do you actually know what payday lending is and what the lending rates are like? They're designed to trap people in an endless cycle of high-interest debtorship.

peterhadlaw 8y ago

Yeah if you look at APRs, except what the anointed don't want you to know is that these loans are very short term, not lasting years. This is a choice you're advocating to remove from people experiencing hardships you will never understand. The reason the interest is so high is that these are high risk and high necessity markets.

nsp 8y ago
But the loans are designed and in 80% of cases rolled over into a sequence of short term loans, meaning that looking at the APR is not as unreasonable as it might sound for a 2 week loan. Source: CFPB study: https://files.consumerfinance.gov/f/201403_cfpb_report_payday-lending.pdf https://files.consumerfinance.gov/f/201403_cfpb_report_payda... Personal experience: I've taken out payday loans they definitely tried to steer me into rolling them over
axaxs 8y ago
If the interest were so high just to counterbalance the 'high risk', then lenders wouldn't be profiting the billions of dollars they are off of them. Why not just cap the APR at something less exploitative?
blackflame7000 8y ago
The thing is that most people who take a payday loan do so because of an emergency need such as a doctor bill, car repair, or rent shortfall. Then they are stuck because suddenly next months pay is already being spent today and its more expensive. About 85% of the traffic is repeat customers from what I observed when I built the online systems that would process these applications
JackFr 8y ago
The two week loan typically gets rolled multiple times, and on average end up as as in the 60 to 90 day range. Payday lenders -- because of their nearly limitless willingness to roll loans -- face default rates of around 6 percent, similar to those of credit cards. You have no idea what hardships I've faced, what my personal experience with the payday loans is or what my professional level of understanding about the industry is, so I'd prefer you not lecture me about what I will and won't understand. You can make usurious loans if you like, but don't use our courts to collect. We don't want to be part of it.

intuitionist 8y ago

Do you actually know what default rates are like for people without access to better sources of credit? The interest rates are so high because that's the only way payday lenders can make money. In states with usury laws that prohibit such high interest rates, you don't see lenders lowering their rates; you see credit for poor people dry up completely. Liz Warren does have a good solution to this, namely postal banking. (The US government can swing the losses incurred from lending small sums to high credit risks at low rates.) But just killing the payday lenders without setting up an alternative is not a good idea.