Your Payday Loan Customers Are Willfully Ignorant

[BlueYonder]

Even when presented with side-by-side examples of payday loan charges that are far costlier than high interest credit cards, 90% of the loan-takers don't care.

Slate Mag on payday loan customers

From the article: "So presenting borrowers with a clearer explanation of how costly it will be to carry the loan might save some folks from falling into the payday debt trap. But what about the other 90 percent of borrowers, who even when presented with evidence of the long-term costs still took the loan? For many of these borrowers, no amount of information will deter them."

I had reservations about the payday loans and rebill offers, etc., etc., but never let it deter me because I know that people willfully ignore the consequences so screw that. Give the public what they want, or someone else will.

(I don't actually run payday loan offers, however.)

 

[kblessinggr]

I can't remember the % they're allowed to charge here in Michigan. But I do remember that back in 2002 just as I was moving out of the state of North Carolina, they made those check cashing advancement places illegal mostly for the very reason of the traps mentioned above.

I used such a service couple times when I lived down there as a programmer/analyst, and since I got paid on a monthly basis I sometimes needed the money 2 weeks earlier, the place down the street from my work wasn't too bad I think the commission was something like 20%-25% though (I remember it was something like 20 to every 100), I only borrowed what I needed which was fine since my paycheck was usually 4 times that. The problem of course is if you weren't able to pay back on time you had one hell of a hefty interest on top of that sometimes on a daily basis. My roommate fell into the category of 'who cares', I remember when he moved back to maine he did a cash advancement from the place, and then over-drafted 500$ from the bank he had down there, and then left the state the next day.

The problem of course is that regardless of people knowing the risk ahead of time, they always cry scam/foul when it turns against their favor.

 

[brianpaxton]

the place down the street from my work wasn't too bad I think the commission was something like 20%-25% though

Are you kidding, "not bad" ?

Those places RAPE people, it's a disgusting display of greed, and taking advantage of people who least need taken advantage of.

That 2-week 20-25% often add up to 800-1000% yearly, and forget about the rate once you go late, it's much worse.

But, like the warnings posted prominently on cigarette packs, enormous interest rates do little to disway those who [think] they "need" the money TODAY!

 

[johu]

The problem with the comparison chart is that people get payday loans because they don't have the ability (generally) to get an unsecured credit card.

 

[aeisn]

Are you kidding, "not bad" ?

Those places RAPE people, it's a disgusting display of greed, and taking advantage of people who least need taken advantage of.

Is it more of a disgusting display of greed then tricking people into a signing up for a $100/month bizopp rebill?

 

[markus]

yes, the fees are high.

fyi - approx 30-35% WILL default on the loan

if it was a good line of business the banks would do it.

fair amount of risk for lenders. the crazy rates are to cover the deals gone south

 

[keliix06]

The vast majority of people who take out payday loans pay them back within the 2 weeks and go on with their life. For them it is the only way to get cash when they need it. And the $30 they might pay back on a $200 loan is lower than or equal to what most banks charge for an overdraft fee. And it's certainly way lower than being late on your credit card when they will charge you $30 and increase your APR to 30%, costing you thousands.

I spent a year heavily promoting payday and I know one of the top 10 payday affiliates and have learned a lot about the market from him.

Extrapolating out the percentage rate for a loan that is only designed to cover 2 weeks or less will obviously create huge, scary numbers.

 

[medicalhumor]

No different than Rent-a-Center. I had a roomate a long time ago that rented a 19" TV from RAC and over the long term, he ended up paying close to $600 for a TV that you could have purchased outright at a store for $200 at the time.

 

[kblessinggr]

Are you kidding, "not bad" ?

Those places RAPE people, it's a disgusting display of greed, and taking advantage of people who least need taken advantage of.

That 2-week 20-25% often add up to 800-1000% yearly, and forget about the rate once you go late, it's much worse.

But, like the warnings posted prominently on cigarette packs, enormous interest rates do little to disway those who [think] they "need" the money TODAY!

Comparatively speaking it wasn't bad for that kind of business.

Also you need a serious check on your math. 20-25% each time, does not add up to 800-1000% yearly, its still 20-25%, especially since you didn't include late fee into that. And some people do need the money instantly, take rent for example, depending on the place you live, being a day late adds 50$, and some places continue to add 20$ per day you're late on rent. Or if you have a shut off notice for electric... god knows you're not going to get a response out of FIC before the due date. So some poeple who may already be in debt as it is, will often just take the chance and just think of it as yet another pile in their mailbox every month from creditors. It's stupid, but thats the way some borrowers see it.

 

[kblessinggr]

No different than Rent-a-Center. I had a roomate a long time ago that rented a 19" TV from RAC and over the long term, he ended up paying close to $600 for a TV that you could have purchased outright at a store for $200 at the time.

Yea my wife wanted a plasma screen from them, at rate of bout 100/month, true a 60" on the wall would be nice... but we don't need that... we got two 27" as it is, and there's no rent-to-own option so by the time you get around to paying enough to own it... it still ain't yours.