Re: Payday Lending Part Deux

On Sat, 17 May 2008 22:56:48 -0400, Mikko Peltoniemi
<mikkopel@[EMAIL PROTECTED]
> wrote:

>Boron Elgar wrote:
>
>> Fraud, the basis of pyramid and Ponzi scams, has been illegal for a
>> long, long time.  Again, the difference is quite stark in that no one
>
>As it should be. And there is a possibility with a pyramid scheme
>that you will get money. You might even get a lot of money. Does that
>make it good?

Scams are not good. A  legitimate business, such as a pay day loan
company, is not a scam.  They charge a fee for their services. Their
profits are not controlled by the government, but their loan term
disclosures usually are, as they are for furniture and car and other
types of loans or credit extensions. 

Those who are the greatest credit risks almost invariably pay more for
credit.  These costs may come in the form of higher interest overall,
or low rates in the begriming that float according prime or
automatically increase at a certain date or are perhaps interest only
loans that need the full principal refinanced at the end of the loan
term. 

Those with better credit history are generally able to get loans at
nicer interest rates than those with poor credit history.  This is
true all up and down the line at all levels of  borrowing.  

>> is hits the neighborhood selling pay day loans. There is no intent to
>> defraud involved. Why don't you see that?
>
>I just don't see how the practices they use could be construed as
>anything less than trying to defraud consumers.

What is the fraud? The interest rate is posted. The terms of the loan
spelled out and the loans are not sold door-to-door to the
unsuspecting. The borrower is the one who instigates the application.
>
>> If an guy goes to the local watering hole and spends $10 on 2 beers is
>> he getting ripped off to such that the government needs to step in?
>
>The government already regulates liquor sale quite heavily. So yes,
>it does step in.

No, the govt does not regulate that part of liquor sales at all. They
may regulate where and when the stuff is sold, they may require a
certain tax be charged, but they don't tell a bar how much to charge
for a tall one, or the corner store what to charge for a 6 pack.  

>> Stick to one topic at a time. Credit cards are a whole 'nother topic
>> and involve banks. Pay day loans are not in that industry. 
>
>This is usenet, topics have a tendency to drift, and even change
>completely. And credit cards are absolutely connected.

Nah.

It is disclosure of the fees and the voluntary nature of the
transaction that make pay day loan places just another business. 

>> Well no...loaning it out to people who cannot pay it back hurts, but
>> having it available for those who can repay, or charging interest that
>> covers the bad debts that always show up is really ok and what makes
>> the world go around.
>
>Average consumer will still have ways of getting money. Why is that
>so difficult to understand? They're not worse off at all. And the ones
>that really do not have any other means are the ones that can not afford
>a pay day loan to begin with. So they're better off.

There is no such thing as an average consumer in all of this. People
pay fees for all sorts of things that I think are idiotic, like ATM
feels of $2-$5 to get $20 out. And if a person needs a pay day loan,
who are you to judge that he or she is better off without it? How can
you make such a decision for others?

>Why is it so bad that the consumer is better off? What need is there
>to take advantage of, and even sup****t taking advantage of people
>who are worse off, or who aren't as mathematically savvy as others? Not
>everybody is good with math and finances. But what makes a society
>better is when it takes care of the ones who need help. Whether by
>giving out money to the needy, passing legislation to prevent defrauding
>them, or any other methods at their disposal.


No one is being defrauded. People who take out short term loans and
don't repay them are defrauding the companies they take the loans
from. 

>
>> What gave was that Little Sally didn't see the doctor and the strep
>> turned into rheumatic fever, or the horse died or the seed corn never
>> got planted or they all went hungry.
>
>This is a typical payday loan customer? What kind of paychecks do
>farmers get, which they could put as a collateral?

You just so happened to have clipped your own post, which led to my
response above. You asked:

>What happened before the advent of payday loans? Something had to give.

That is what prompted my reply above and I am sticking to it.
>
>Besides I thought farmers are actually pretty well off already,
>and have pretty good income. According to the USDA average farm
>household had an income of $81,480 in 2004.
>
>http://www.usda.gov/do***ents/FARM_FAMILY_INCOME.pdf

Sorry, you have just crossed over into the Twilight Zone.
>
>> You cannot have this both ways...you cannot say that if such pay day
>> companies didn't exist humans would somehow be better financial
>> managers 
>
>Again, I never said anything like this.

You said they'd be better off without the loans. You even said it
above once more.
>
>> And that is great if a person belongs to a credit union that offers
>> it, but most people do not.  Again, once you have the financial
>
>All you need to do to belong in my credit union is to live in Rockland
>County. That's it. There are no income limits. And all credit unions
>have a policy of "once a member, always a member".

Mikko...not everyone knows about credit unions or belongs to them. It
doesn't matter what the requirements of yours are. If someone cannot
get to one or doesn't know that some (maybe 10% or so) offer short
term loans, what difference does it make? If your rationale applied to
everything, we'd all shop nowhere but Wal-Mart.
>
>> these same folks either do not have a CC at all, or are maxed out and
>> cannot get a cash advance. 
>
>And if they are maxed out, how is a pay day loan, and increasing their
>debt burden, going to help them exactly?

Help them in what way? They need the cash, they get the cash. Why
doesn't that help?  Are some going to get in over their heads. Yeah,
they are, just as some people are shopaholics or junkies or take taxis
instead of the subway. You cannot legislate this sort of behavior. IF
the 10% default that Lisa Ann re****ts is accurate, a lot of peeps are
being helped.


Boron