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On the flip side if you regulated the outsized returns down to a more reasonable size then that would legitimize the business and dissuade the scummy sharks (wh

On the flip side if you regulated the outsized returns down to a more reasonable size then that would legitimize the business and dissuade the scummy sharks (who are drawn in by the outsized interest). Was that not proposed?

nemothekid 13y ago
The problem with that is, unless you are running a charity and you are expected to lose money year over year, regulating the returns is just not sustainable. Despite the fact the interest rates are so high, payday loans are not a very profitable business. The reason the interest rates are so high is because they are rarely paid (expectedly). Most of the payday loan companies in the US have profit margins on 6%. Compare that to legitimate banks who have 30-40% margins. Any tighter restrictions would wipe away what little margins they have. Chances are if you did regulate them, it would be same as outlawing them. Legitimate businesses wouldn't be able to keep the lights on, leaving the entire business once again to criminals.
- aestra 13y ago
  ??? Charities aren't expected to lose money. If they did, it wouldn't be sustainable. They are expected to make a small profit, otherwise they wouldn't last. I'd also like to see some sources behind those number. As far as I know you just pulled them out of your ass. Around here there are many payday loan places that advertise on TV with celebrity spokespeople. If they weren't making a big profit, I don't know how they could afford it.
  - nemothekid 13y ago
    I looked into all this roughly two months ago when a user in the financial industry responded to Elizabeth Warren's proposal for the government to handle payday loans. Here he outlines why they don't work - http://www.reddit.com/r/progressive/comments/1wygov/elizabeth_warren_proposes_replacing_payday/cf7tgns http://www.reddit.com/r/progressive/comments/1wygov/elizabet... The next reply goes into their cost effectiveness - http://www.reddit.com/r/progressive/comments/1wygov/elizabeth_warren_proposes_replacing_payday/cf7ukod http://www.reddit.com/r/progressive/comments/1wygov/elizabet... Now if you don't want to believe "some user on Reddit", take into account that those "payday loan places that advertise on TV" are also publicly traded companies. Here is EZPAY's public info at Yahoo Finance - http://finance.yahoo.com/q/ks?s=EZPW+Key+Statistics http://finance.yahoo.com/q/ks?s=EZPW+Key+Statistics, their return was only 5.60%. Heres where I got that 6%/30% number: https://www.qcholdings.com/mythsaboutlending.aspx https://www.qcholdings.com/mythsaboutlending.aspx

nemothekid 13y ago

The problem with that is, unless you are running a charity and you are expected to lose money year over year, regulating the returns is just not sustainable. Despite the fact the interest rates are so high, payday loans are not a very profitable business. The reason the interest rates are so high is because they are rarely paid (expectedly). Most of the payday loan companies in the US have profit margins on 6%. Compare that to legitimate banks who have 30-40% margins. Any tighter restrictions would wipe away what little margins they have. Chances are if you did regulate them, it would be same as outlawing them. Legitimate businesses wouldn't be able to keep the lights on, leaving the entire business once again to criminals.

aestra 13y ago
??? Charities aren't expected to lose money. If they did, it wouldn't be sustainable. They are expected to make a small profit, otherwise they wouldn't last. I'd also like to see some sources behind those number. As far as I know you just pulled them out of your ass. Around here there are many payday loan places that advertise on TV with celebrity spokespeople. If they weren't making a big profit, I don't know how they could afford it.
- nemothekid 13y ago
  I looked into all this roughly two months ago when a user in the financial industry responded to Elizabeth Warren's proposal for the government to handle payday loans. Here he outlines why they don't work - http://www.reddit.com/r/progressive/comments/1wygov/elizabeth_warren_proposes_replacing_payday/cf7tgns http://www.reddit.com/r/progressive/comments/1wygov/elizabet... The next reply goes into their cost effectiveness - http://www.reddit.com/r/progressive/comments/1wygov/elizabeth_warren_proposes_replacing_payday/cf7ukod http://www.reddit.com/r/progressive/comments/1wygov/elizabet... Now if you don't want to believe "some user on Reddit", take into account that those "payday loan places that advertise on TV" are also publicly traded companies. Here is EZPAY's public info at Yahoo Finance - http://finance.yahoo.com/q/ks?s=EZPW+Key+Statistics http://finance.yahoo.com/q/ks?s=EZPW+Key+Statistics, their return was only 5.60%. Heres where I got that 6%/30% number: https://www.qcholdings.com/mythsaboutlending.aspx https://www.qcholdings.com/mythsaboutlending.aspx