2 ms·

I don't necessarily see anything unethical about offering short term, quick turnaround loans. Or is there some part of their business practise that makes them s

by jiggy2011 13y ago

I don't necessarily see anything unethical about offering short term, quick turnaround loans. Or is there some part of their business practise that makes them shady?

ChuckMcM 13y ago
I've been reading this: http://www.amazon.com/Scarcity-Having-Little-Means-Much/dp/0805092641/ref=sr_1_1?ie=UTF8&qid=1380922434&sr=8-1&keywords=scarcity http://www.amazon.com/Scarcity-Having-Little-Means-Much/dp/0... Which has some excellent insights into this sort of behavior. Basically if you don't have enough money you are willing to borrow against a future payout for an extortionate rate (say 5% if you pay it back in a month which is an annualized rate of 60% interest). But what it really means it that the 5% you paid to get early access to money is a huge chunk of your future income. Lets say you make $1000/month and you're always behind so you're always getting a payday loan with a 5% rate which you pay back when you get paid. Over 12 months you've paid 12 * $50 or $600 for that privileged which is nearly an entire month's pay. Great for the lender, sucks for you. Not surprisingly the principle is pretty general. I found when reading it that I could exchange "time" for "money" (which is to say making poor time choices when I felt time was scarce which would only cause me to have even less time in the future)
- jiggy2011 13y ago
  But the question is, what happens if such loans are unavailable? Late charges on bills or missed opportunities (like can't get a new suit for a job interview). If you did short term high risk loans with standard loan rate APR like you would get from a bank it would be impossible to get any margin at all.
  - ChuckMcM 13y ago
    That is a really excellent question. I don't know. In one universe people feel the pain of the scarcity and make better choices, in another they fall off of 'barely subsisting' into abject poverty. Either outcome is possible. In a third, less likely :-), universe we put together a basic income program and keep people out of the mental trap.

I don't necessarily see anything unethical about offering short term, quick turnaround loans. Or is there some part of their business practise that makes them shady?

ChuckMcM 13y ago

I've been reading this: http://www.amazon.com/Scarcity-Having-Little-Means-Much/dp/0805092641/ref=sr_1_1?ie=UTF8&qid=1380922434&sr=8-1&keywords=scarcity http://www.amazon.com/Scarcity-Having-Little-Means-Much/dp/0... Which has some excellent insights into this sort of behavior. Basically if you don't have enough money you are willing to borrow against a future payout for an extortionate rate (say 5% if you pay it back in a month which is an annualized rate of 60% interest). But what it really means it that the 5% you paid to get early access to money is a huge chunk of your future income. Lets say you make $1000/month and you're always behind so you're always getting a payday loan with a 5% rate which you pay back when you get paid. Over 12 months you've paid 12 * $50 or $600 for that privileged which is nearly an entire month's pay. Great for the lender, sucks for you. Not surprisingly the principle is pretty general. I found when reading it that I could exchange "time" for "money" (which is to say making poor time choices when I felt time was scarce which would only cause me to have even less time in the future)

jiggy2011 13y ago
But the question is, what happens if such loans are unavailable? Late charges on bills or missed opportunities (like can't get a new suit for a job interview). If you did short term high risk loans with standard loan rate APR like you would get from a bank it would be impossible to get any margin at all.
- ChuckMcM 13y ago
  That is a really excellent question. I don't know. In one universe people feel the pain of the scarcity and make better choices, in another they fall off of 'barely subsisting' into abject poverty. Either outcome is possible. In a third, less likely :-), universe we put together a basic income program and keep people out of the mental trap.