5 ms·

Exactly this. These are people with poor credit histories at high risk of defaulting and usually a track record of late payments on bills. No one will touch th

Exactly this. These are people with poor credit histories at high risk of defaulting and usually a track record of late payments on bills. No one will touch them without charging exorbitant fees. We either stop it and let people suffer, or we allow it to continue and people at least have some ability to continue living a somewhat decent quality of life and not homeless on the streets.

jacquesm 12y ago
I don't think those are the only two options. Payday loan companies have exorbitant interest rates, in other countries there are different - and less based on graft - ways of dealing with this problem. For instance in NL we have the 'Gemeentelijke kredietbank' (https://www.degkb.nl/diensten/kredietverlening https://www.degkb.nl/diensten/kredietverlening in dutch), a bank that operates without profit motive for those in situations as you described above.
- davidw 12y ago
  > I don't think those are the only two options. Another option is that it's made illegal, and there are no good alternatives, so "unofficial" sources for loans are found. These can range from family members to Mafias.
  - lotsofmangos 12y ago
    Currently the mafia could advertise as being cheaper than Wonga.
    - jacquesm 12y ago
      Cheaper maybe but their repo men leave a lot to be desired.
      - lotsofmangos 12y ago
        It is often exactly the same people, just with a different hat and script.
      - davidw 12y ago
        It's probably cheaper to get a loan from the Mafia in some ways because they have different ways of recovering money from those who don't pay their debts, and more incentives at their disposition than legal companies do.
        electromagnetic 12y ago
        I don't think this works in socialist countries. "Pay up or I'll break your legs!" "Okay, you won't get your money, I get my legs fixed for free and I get disability and unemployment."
        jacquesm 12y ago
        Not everything is reversible.
        krapp 12y ago
        Having your bones broken still hurts, even if you're a socialist. Also "that disability check you'll be getting will do quite nicely as down payment if you don't want your (parent|siblings|significant other) mailed to you in pieces."
dspillett 12y ago
The problem is finding the balance. They will suffer without the fresh loan, but they'll suffer more if they can't cope with the fresh loan and end up in an even bigger trap with more predatory types after them. And some companies, going by certain leaked memos that have been circulating, are designed to be evil and extract as much as possible without any pretence of trying to help their customers.
lotsofmangos 12y ago
When the economy tanks, the government is one of the very few entities that can still borrow cheaply and in quantity. Unfortunately many governments are off flogging austerity to the public while underwriting the banks and keeping interest rates near zero. So the banks can't be bothered lending and the lender of last resort becomes the payday loans companies. Meanwhile traditional banking is busy investing in the payday loans rather than directly lending itself as bank loans follow interest rates. The USA is actually doing comparatively well in all this as it never took the austerity thing to heart as much as the Eurozone, where Germany is currently worrying about a triple-dip. edit - as far as I can tell, the reason that the interest rates have been kept so low, at least for here in the UK, is because the house price bubble must be defended at all costs. There is a large portion of the UK economy that will scream blue-murder if they stop getting massive year on year returns on simple ownership of housing and the Bank of England doesn't like pissing them off, which is going to be Mike Carney's job when he finally raises interest rates, shortly before jumping ship as the official scapegoat of the UK house price crash. Obviously this is a massive guess, but it looks somewhat likely.
- electromagnetic 12y ago
  Mark Carney is the reason Canada basically bypassed this recession. It was so minor hear it was barely noticed, the biggest impact was the stall in new house construction. However our banks thrived, they profited by offering loans to major banks down in the US. House prices are on the up and up. Me and my wife bought just before they tightened up mortgage regulations here, since then house prices in our area have been going up by about 13% per year as banks were no longer issuing mortgages for Toronto house prices ($500k and up) as the down payment required doubled and they increased the threshold on the default insurance (you need about 15% down to get the same rate you used to at 5% down). However, the banks were being so risk averse in the recession I couldn't even get approved for a $500 credit card. I'm from the UK, so with no credit history I was an untouchable. A couple years earlier my wife with essentially negative income as a student had been handed cards left, right and centre.

jacquesm 12y ago

I don't think those are the only two options. Payday loan companies have exorbitant interest rates, in other countries there are different - and less based on graft - ways of dealing with this problem. For instance in NL we have the 'Gemeentelijke kredietbank' (https://www.degkb.nl/diensten/kredietverlening https://www.degkb.nl/diensten/kredietverlening in dutch), a bank that operates without profit motive for those in situations as you described above.

davidw 12y ago
> I don't think those are the only two options. Another option is that it's made illegal, and there are no good alternatives, so "unofficial" sources for loans are found. These can range from family members to Mafias.
- lotsofmangos 12y ago
  Currently the mafia could advertise as being cheaper than Wonga.
  - jacquesm 12y ago
    Cheaper maybe but their repo men leave a lot to be desired.
    - lotsofmangos 12y ago
      It is often exactly the same people, just with a different hat and script.
    - davidw 12y ago
      It's probably cheaper to get a loan from the Mafia in some ways because they have different ways of recovering money from those who don't pay their debts, and more incentives at their disposition than legal companies do.
      - electromagnetic 12y ago
        I don't think this works in socialist countries. "Pay up or I'll break your legs!" "Okay, you won't get your money, I get my legs fixed for free and I get disability and unemployment."
        jacquesm 12y ago
        Not everything is reversible.
        krapp 12y ago
        Having your bones broken still hurts, even if you're a socialist. Also "that disability check you'll be getting will do quite nicely as down payment if you don't want your (parent|siblings|significant other) mailed to you in pieces."

dspillett 12y ago

The problem is finding the balance. They will suffer without the fresh loan, but they'll suffer more if they can't cope with the fresh loan and end up in an even bigger trap with more predatory types after them. And some companies, going by certain leaked memos that have been circulating, are designed to be evil and extract as much as possible without any pretence of trying to help their customers.

lotsofmangos 12y ago

When the economy tanks, the government is one of the very few entities that can still borrow cheaply and in quantity. Unfortunately many governments are off flogging austerity to the public while underwriting the banks and keeping interest rates near zero. So the banks can't be bothered lending and the lender of last resort becomes the payday loans companies. Meanwhile traditional banking is busy investing in the payday loans rather than directly lending itself as bank loans follow interest rates. The USA is actually doing comparatively well in all this as it never took the austerity thing to heart as much as the Eurozone, where Germany is currently worrying about a triple-dip. edit - as far as I can tell, the reason that the interest rates have been kept so low, at least for here in the UK, is because the house price bubble must be defended at all costs. There is a large portion of the UK economy that will scream blue-murder if they stop getting massive year on year returns on simple ownership of housing and the Bank of England doesn't like pissing them off, which is going to be Mike Carney's job when he finally raises interest rates, shortly before jumping ship as the official scapegoat of the UK house price crash. Obviously this is a massive guess, but it looks somewhat likely.

electromagnetic 12y ago
Mark Carney is the reason Canada basically bypassed this recession. It was so minor hear it was barely noticed, the biggest impact was the stall in new house construction. However our banks thrived, they profited by offering loans to major banks down in the US. House prices are on the up and up. Me and my wife bought just before they tightened up mortgage regulations here, since then house prices in our area have been going up by about 13% per year as banks were no longer issuing mortgages for Toronto house prices ($500k and up) as the down payment required doubled and they increased the threshold on the default insurance (you need about 15% down to get the same rate you used to at 5% down). However, the banks were being so risk averse in the recession I couldn't even get approved for a $500 credit card. I'm from the UK, so with no credit history I was an untouchable. A couple years earlier my wife with essentially negative income as a student had been handed cards left, right and centre.