Payday lending industry, local regulations (West, Howe: loans, income, income tax)

[sinsativ]

Councilman Diego Bernal's proposal to locally regulate payday and auto title lenders advanced Wednesday Bernal's comments.
“A lot of the folks in this town are working-class, and these businesses prey upon their desperation,” Bernal said. “Since I've started this, I'd say I've reviewed at least 110 contracts, and I didn't find one that had an interest rate of less than 230 percent. I have one here that is 616 percent,” he said.



Can you believe this, these loans average from $500 to $2500, and range six months to a year. The interest estimated, $1,000 borrowed for a year, repay 24 pmts, equals $2,188 in interest alone! and thats a low rate, 300%. These supposed payday lenders are causing more problems then they solve.

[Hedgehog_Mom]

I've never understood how they were allowed to operate. Payday loans and income tax refund anticipation loans should be done away with, and people who rely on those loans should either learn to live within their means or find a way to make more money. I've had friends before who had loans out at three or four different places, and known people who take out payday loans for things like their kids' birthday parties.

[Paka]

It is a sign of the times and how desperate people become when they fall on hard times. I am praying that someone does something to "help" limit these kinds of "lenders"...because daily in this economy more and more people are at the point they will do anything, to include these kinds of loans. They may seems like a "help" but are only selling their souls to the devil. Please, for those of you that have to give, remember to GIVE AT HOME!!! We prefer local, SA charities to ensure that we are cleaning up our own backyard first.

[TexasRedneck]

I hate the payday type lenders - but the city has NO business getting involved. Period. Just as they have with so many other things, though, they won't let that stop 'em.

You have a city to run, folks. When you have the potholes fixed, DUI's under control an' taggers out cleaning up their mess, THEN tell me about this other stuff. Until you're doing what you're SUPPOSED to be doing - shut up and sit down!!

[kevcrawford]

I tend to agree. I hate them, but getting involved is just more regulation. At a point it's hard to protect people from themselves and we could spend endless resources trying to stop it, only to have it fail.

They need to be forced to disclose the actual rates, etc in big bold print on their contracts, and on their doors. However, if people are determined to screw themselves, they're going to find a way to do it.

[TowBar]

What get's me are payday loan places with a drive-thru window. Seriously? You can pull up to the window and get some money like you would get a cheeseburger? Or is the drive-thru window for payments only?

[SabresFanInSA]

Originally Posted by Hedgehog_Mom

I've never understood how they were allowed to operate. Payday loans and income tax refund anticipation loans should be done away with, and people who rely on those loans should either learn to live within their means or find a way to make more money. I've had friends before who had loans out at three or four different places, and known people who take out payday loans for things like their kids' birthday parties.

To counter that, I am not sure why they wouldnt be allowed to operate. If I offer to loan you $500 and tell you that you have to pay me back $3000, and you say "ok", why am I the bad guy?

I whole-heartedly agree that people should not be in a position to rely on them, but if they are that isnt really the lender's fault.

[SabresFanInSA]

On a related note, you gotta love Western Sky Financial. The tell you upfront "yes the money is expensive".

Their rates are on a $10,000 loan:
89.68% APR - 84 payments of $743.39 for a total of $62453.16!

Their lower loan $850 (you only get $500 and there is a $350 loan fee) is:
342.86% APR - 12 payments of 150.72 for a total of $1808.64
So a $500 loan (because that is all you ended up with) costs you $2158.64!!!

I am SO in the wrong business!

[BenjaminNicholas]

Lenders, loan sharks and pay-per-month will always exist- They always have in some form or fashion. What I ask is what even happened to PERSONAL RESPONSIBILITY?
By law, they must all tell you the terms up-front: It's in the paperwork you sign. If you don't read it through before signing, then that's truly your funeral. Who in their right mind would simply sign for cash and not know a thing about it? If that's the case, then these people deserve no mercy for their sheer stupidity. To me, it's another case of 'he got me pregnant.'

No dear, you BOTH got you pregnant.

As for them being in a drive-up window: If folks can get married at a drive-through, then what's so bad about a payday loan? Honestly. It's what the world has come to.




BN

[Merovee]

Payday lending and other related services which target the poor are quite destructive and the effects are residual, they do not stop with the borrower but affect families and communities. Like any other predatory practice that harms society it should be regulated.

Plenty of naive viewpoints exist that state the government should not regulate any businesses. We already regulate many industries. There is no magic date in our past where every business that posed harm to society was regulated, leaving all other business not affected to continue perpetually harming others when and if it is discovered harm is occurring.

If this proposal is a success we should target fast food next to keep health costs low because ultimately we collectively pay.