Don’t Cry For The Loan Sharks
So, one of my buddies had to go in and pay the power bill in person today and it happens to be in one of those Pay-Day Loan places. He picked up the following flier. It speaks for itself. (Click on picture for better text resolution)
So the gist of this is that the DoD has decided that maybe a 36% APR loan isn’t the right thing for its personnel. It’s about frikkin’ time.
Let’s remember these fine upstanding companies who are unable to function offering you a short-term loan for less than 36%
Hey kids, did you know that the Wikipedia article on Loan Sharks specifically mentions Payday Loan operations?
Popularity: 7% [?]
 Stumble it!
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Guess who got greenlit on Fark.com today | LeftWingConspiracy.com:
[...] Comments RSS « Don’t Cry For The Loan Sharks [...]
21 January 2008, 4:48 pmThe Neocentrist:
Payday Loans…
I just noticed a posting on one of my favorite blogs that discusses payday loans. The Consumerist links a blog called the Leftwing Conspiracy that criticizes the payday loan industry for distributing a flier about a mandatory reduction in interest ra…
21 January 2008, 5:01 pmPhillip J. Eby:
So, does that mean you’d be willing to loan me $100 for two weeks, if I gave you the generous sum of $1.38 for the privilege?
21 January 2008, 5:41 pmLeftyInChief:
No I wouldn’t! Predatory lending is a scummy way to make a living.
The saddest and most comical part of this whole story is the boo-hoo line that this extremely profitable business is singing. Thirty-six percent APR is crazy to most people, but to the predatory lending community it’s about an order of magnitude off. You think $1.38 is low, but does 13.80 to borrow $100 for two weeks sound reasonable? That’s more in line with what these guys want to charge.
Here’s a link to a .pdf showing the kinds of rates these guys want to charge
Being legal to do and being the right thing to do aren’t the same thing.
21 January 2008, 5:52 pmMichael Z. Williamson:
I’m not sure what’s “conservative” about 36% interest. How does one “conserve” at 36%?
And to think I balked at 21% one time, from “legitimate” Crapital One.
21 January 2008, 7:11 pmccsears:
yeah, it’s definitely not $1.38. What about those mysterious “fees?” Isn’t that some kind of accounting scam?
lets look at a typical APR of 400% (see that .pdf file linked above)
400%APR yields a bi-weekly interest rate of roughly 5.5%
if i borrow 100$ and can manage a 10$ payment every 2 weeks (20$/month)…
i pay back 148$ in 30 weeks
if i can manage a 20$ payment…
i pay back 120$ in 12 weeks.
but let’s be realistic, the average loan amount is probably more like 300$ y’know, enough to cover utilities and cell phone, plus a few late charges…
to repay that loan, i need to pay back 20$ every two weeks for 66 weeks (roughly 15 months) for a grand total of $646.45. (it works out to a $43.00 average monthly payment for those 15 months)
(and who knows what the penalty is for missing a payment…)
for the sake of argument, let’s assume that my need for a short-term loan originated with a 50$ monthly deficit in my household finances. assuming i haven’t gotten a promotion, i’ve almost doubled my monthly deficit by trying to play catch-up this way.
the correct thing to say about this is that the average hypothetical jackass should avoid getting a fancy cell phone. but, if wages just didn’t add up for a hypothetical working-poor type person to purchase the necessities of modern living (like gas at $3.50/gallon) without credit, they would be f*&’ed.
and then double-f&*(‘ed with interest.
besides, what do you expect the military to do? if you’re not willing to take on the “opportunity cost” of volunteering, and if we can’t deploy someone who’s in “severe” debt, who’s gonna fight?
22 January 2008, 1:09 pmefittery:
I would like to reply to the following:
Phillip J. Eby:
So, does that mean you’d be willing to loan me $100 for two weeks, if I gave you the generous sum of $1.38 for the privilege?
21 January 2008, 5:41 pm
Most likely not.
But here is what I have done through http://www.kiva.com
I have made loans to three people for a total of $300.00
Actually, the loans were for $100 each to people in Paraguay, Cambodia and Tajikistan.
These are all interest free loans for these people to run businesses to support their families.
I hope I get the money back because I will just loan it out again to somebody else. I get no interest.
So far, the amounts are being paid back in dribs and drabs.
So, pass the word on and maybe others will do good and make a few people in the world think “Wow, those americans are not so UGLY after all”.
28 April 2008, 3:17 pmKevin:
Just another example of what scary times we live in. Corrupt leadership, Natural or man made disasters,food & resource shortage or monetary collaspe something big is going to happen. I am making preperations now. This site is loaded with tips on surviving anything….http://www.disastersurvivalist.com
13 November 2008, 11:25 amPolitical Humor:
I don\’t normally leave comments! But what you said here makes one think! Would you mind if I placed a link back from my blog?ii
30 November 2008, 11:35 am