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Need a Loan?? Yikes!!!
Posted by: Jack D.
Date: August 16, 2008 06:36PM
So I'm watching TV and i see this ad for a company called Cash Call. It seems they will give you an unsecured loan over the phone and at the end of the ad the announcer says: "Make sure you can afford the payments before you call!".

I caught a second or two of the 6pt fine type at the bottom of the screen and I thought I misread the rate so I went to the website. [www.cashcall.com]

Holy Carp!

Loan Product: $2,600 Loan
Borrower Proceeds: $2,525
Loan Fee: $75
APR: 99.25%
Number of Payments: 42
Payment Amount: $216.55
Total of Payments: $9095.1 (plus the $75 loan fee)

This rate was for CA and when I checked some of the other states - like CT it was even worse!

Loan Product: $1,500 Loan
Borrower Proceeds: $1,000
Loan Fee: $500
APR: 141.42%
Number of Payments: 12
Payment Amount: $159.83
Total of Payments: $1917.96 (plus the $500 loan fee)

You would think this is illegal but it's on TV and this is not the first time I've seen this. Heck, at these rates it might almost be cheaper to see your local MafiaCo. loan shark representative and take your chances. How desperate do you have to be to call these people? Maybe if i needed a kidney...tonight...at 3 AM...on a Holiday weekend... but that's the only circumstance i can think of.



- Jack D.




New tasteless sig coming soon!
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Re: Need a Loan?? Yikes!!!
Posted by: Paul F.
Date: August 16, 2008 06:41PM
You don't have to be desperate... just really really stupid.
Or incapable of doing simple math involving percents.



Paul F.
-----
A sword never kills anybody; it is a tool in the killer's hand. - Lucius Annaeus Seneca c. 5 BC - 65 AD
----
Good is the enemy of Excellent. Talent is not necessary for Excellence.
Persistence is necessary for Excellence. And Persistence is a Decision.

--

--

--
Eureka, CA
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Re: Need a Loan?? Yikes!!!
Posted by: JoeH
Date: August 16, 2008 06:49PM
Fortunately, even if I was unable to do the math, I am protected from these clowns. They can not do business with residents of my state.



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Re: Need a Loan?? Yikes!!!
Posted by: MacArtist
Date: August 16, 2008 07:08PM
I am happy to see my state is excluded also.

This is loan-sharking. 141% interest on a $1K loan. Amazing.



I sit on a man’s back, choking him and making
him carry me, and yet assure myself and others
that I am very sorry for him and wish to ease his
lot by all possible means — except by getting off
his back. - Leo Tolstoy, novelist and Philosopher
(1828-1910)

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Re: Need a Loan?? Yikes!!!
Posted by: Mike Johnson
Date: August 16, 2008 07:10PM
Poverty's expensive.

It's time we reenact usury laws.
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Re: Need a Loan?? Yikes!!!
Posted by: JoeH
Date: August 16, 2008 07:32PM
Quote
Mike Johnson
Poverty's expensive.

It's time we reenact usury laws.

And do it at the national level. Used to be businesses like banks and stores with their own credit cards had to obey state laws on maximum interest rates. But between Congress and the Federal Courts they made the argument those should not apply for instance to a bank with a Federal charter instead of a state one.



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Re: Need a Loan?? Yikes!!!
Posted by: Paul F.
Date: August 16, 2008 07:38PM
And what will you folks in favor of usury laws whine that "they" should do when the economy collapses due to the unavailability of credit of ANY kind when financial companies can no longer make a profit and get out of the business?

Instead, teach people to read and do simple math... and if they still want to do something that stupid... let them pay the price (so to speak).



Paul F.
-----
A sword never kills anybody; it is a tool in the killer's hand. - Lucius Annaeus Seneca c. 5 BC - 65 AD
----
Good is the enemy of Excellent. Talent is not necessary for Excellence.
Persistence is necessary for Excellence. And Persistence is a Decision.

--

--

--
Eureka, CA
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Re: Need a Loan?? Yikes!!!
Posted by: Filliam H. Muffman
Date: August 16, 2008 08:11PM
Ohio virtually took on payday loan operators recently. Good to see some states doing the right thing.
[consumerist.com]

The industry is fighting back with dirty tactics.
[pubcit.typepad.com]



In tha 360. MRF User Map
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Re: Need a Loan?? Yikes!!!
Posted by: JoeH
Date: August 16, 2008 08:12PM
Sorry Paul, the economy did not collapse due to unavailability of credit before when the state usury laws, usually limiting interest charges to a max of around 18%, were more in force. Their existence might even give some of the credit card grantors a real good reason to take a more careful look at who and how much they give credit to. The freedom to give cards to just about anyone, and then charge default rates of up to over 30% to someone already under water certainly has not made them more careful.

By the way, calculating interest, especially compound interest., is not "simple math" It gets even harder on things like amortization over a series of payments and the like. You can get calculators that have these functions programmed in, but it is very easy to use the wrong functions if you do not understand the math underlying them. By the way, that was one thing I went through in college junior year. After taking the full calculus series and additional engineering/science math courses first.







Edited 1 time(s). Last edit at 08/16/2008 08:13PM by JoeH.
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Re: Need a Loan?? Yikes!!!
Posted by: bwicklander
Date: August 16, 2008 08:21PM
Stopping at a restaurant during the end of the lunch rush - I saw 10 people walk into a pay day advance store.

I can't believe how many have popped up in town.
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Re: Need a Loan?? Yikes!!!
Posted by: blooz
Date: August 16, 2008 08:34PM
The economy won't collapse with some good usury laws. Why assume, Paul, that ANY usury law will have adverse effects? It will only affect those rip-off artists. y bank is doing quite well with much more modest rates. Any company that NEEDS to charge 141% to be profitable deserves to die.



And we should consider every day lost on which we have not danced at least once.
—Friedrich Nietzsche
Western Massachusetts
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Re: Need a Loan?? Yikes!!!
Posted by: space-time
Date: August 16, 2008 08:47PM
did you notice their slogan?

Loans that fit your lifestyle.

LOL, what a load of BS
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Re: Need a Loan?? Yikes!!!
Posted by: Don Kiyoti
Date: August 16, 2008 09:12PM
Paul I appreciate your sentiment that people should not do stupid things, and those who do stupid things should deal with the consequences. I don't feel a lot of sympathy for such people.

But I feel extreme contempt for those who's business model is to prey on the stupid. These outfits should be run out of business because it's simply wrong to take advantage of people to that extent, even if some consumers facilitate it.





[picasaweb.google.com] [www.flickr.com]
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Re: Need a Loan?? Yikes!!!
Posted by: Paul F.
Date: August 16, 2008 09:25PM
blooz;

Government does not know how to take "reasonable" measures. If you involve government in usury regulations, they will take complete control, and we WILL see a return to days when a large percentage of people CANNOT get ANY form of loan or credit.


Don;

The only difference between your thinking and mine is that I don't want it to be GOVERNMENT that runs them out of town.
Start a government program to reduce "predatory lending".. great... when there are no more "predatory lenders", do you think that government office closes? Lays off employees? REDUCES their budget? Hell no... They go looking for something else to "fix".

Get 50 people together, and go print up some very simple leaflets that show the "real math" of payday lending, and make sure everyone who goes in has one of those leaflets in their hand first.
THAT'S the way to get rid of them.



Paul F.
-----
A sword never kills anybody; it is a tool in the killer's hand. - Lucius Annaeus Seneca c. 5 BC - 65 AD
----
Good is the enemy of Excellent. Talent is not necessary for Excellence.
Persistence is necessary for Excellence. And Persistence is a Decision.

--

--

--
Eureka, CA
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Re: Need a Loan?? Yikes!!!
Posted by: rgG
Date: August 16, 2008 09:43PM
Paul,
I feel like the government that governs least governs best, but this is an instance where some oversight is needed. Georgia has taken action to keep payday lenders from becoming loan sharks like the one linked above. Sometimes it is necessary to protect people from themselves and I agree that this is one of those times.

There are many people who will never understand what the interest rate means or how ridiculously high it is, no matter how much paperwork you give them. We could debate how high is too high, but I think you would agree that a rate of close to 100% APY, or even higher, is too high for anyone to charge.





Roswell, GA (Atlanta suburb)
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Re: Need a Loan?? Yikes!!!
Posted by: Paul F.
Date: August 16, 2008 09:50PM
Not quite...
I would agree that it is too high for anyone to PAY.

I would much rather explore ways to EDUCATE rather than REGULATE.

If a person HONESTLY cannot grasp what 100% interest means, then maybe they need to be institutionalized for their own safety....

If you want a regulatory solution, let's START with a mandatory 15 minute "class" for people before they can collect their loan... given by a government official if you like...
But for god sake, let's try that before we let governments fingers into yet another facet of our lives and business dealings.



Paul F.
-----
A sword never kills anybody; it is a tool in the killer's hand. - Lucius Annaeus Seneca c. 5 BC - 65 AD
----
Good is the enemy of Excellent. Talent is not necessary for Excellence.
Persistence is necessary for Excellence. And Persistence is a Decision.

--

--

--
Eureka, CA
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Re: Need a Loan?? Yikes!!!
Posted by: JoeH
Date: August 16, 2008 09:51PM
> Government does not know how to take "reasonable" measures. If you involve
> government in usury regulations, they will take complete control, and we WILL
> see a return to days when a large percentage of people CANNOT get ANY form
> of loan or credit.

And when were those days? All your argument has shown is that you have bought hook, line and sinker the misinformation the industry has put out there. Last time I can think this applied was during the Depression, and many of its causes can be traced to unregulated financial transactions on easy credit that were pushed by banks, other lenders and the stock and commodities markets.



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Re: Need a Loan?? Yikes!!!
Posted by: Paul F.
Date: August 16, 2008 09:57PM
Quote

...bought hook, line and sinker the misinformation the industry has put out there.


You obviously haven't read much of what I've written on credit/lending in various posts..

I loathe borrowing money. I won't even buy a CAR unless I can put down 50% in cash. Credit card interest is a form of "Stupid Tax".

But the fault lies with the BORROWER, not the LENDER.

Lending is a business. Borrowing is a choice.
Getting government involved in either one is a bad direction to head.



Paul F.
-----
A sword never kills anybody; it is a tool in the killer's hand. - Lucius Annaeus Seneca c. 5 BC - 65 AD
----
Good is the enemy of Excellent. Talent is not necessary for Excellence.
Persistence is necessary for Excellence. And Persistence is a Decision.

--

--

--
Eureka, CA
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Re: Need a Loan?? Yikes!!!
Posted by: RgrF
Date: August 16, 2008 10:17PM
We built out an entire country while having usury laws on the books. This religion of deregulation has proven wrong in so many areas it's almost indefensible.

Paul evidently prefers taxpayer paid bailouts to any sort of regulation.



"Who's more foolish - the fool or the fool that follows him?" - Obi Wan Kenobi
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Re: Need a Loan?? Yikes!!!
Posted by: rgG
Date: August 16, 2008 10:25PM
Almost all types of financial businesses are already regulated by the government; mainly because they can be confusing, even for people who are not stupid. While Pay Day loan companies are not hard to understand for most people, no amount of education will keep most of the people who use these types of services from getting sucked into them. The only way to keep them from taking advantage of people is to regulate those extortionate rates. No one needs predators like these people out there.





Roswell, GA (Atlanta suburb)
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Re: Need a Loan?? Yikes!!!
Posted by: blooz
Date: August 16, 2008 10:29PM
Quote
Paul F.
blooz;

Government does not know how to take "reasonable" measures. If you involve government in usury regulations, they will take complete control, and we WILL see a return to days when a large percentage of people CANNOT get ANY form of loan or credit.

Paul that's simply not true.
Your anti government stance is clouding your thinking.



And we should consider every day lost on which we have not danced at least once.
—Friedrich Nietzsche
Western Massachusetts
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Re: Need a Loan?? Yikes!!!
Posted by: JoeH
Date: August 16, 2008 10:50PM
> But the fault lies with the BORROWER, not the LENDER.

A perfect example of buying their line, hook, line and sinker.

Yes, I have read many of your posts on credit, and some I agree with. But you have bought into the "you can educate them all" and then they can all make informed decisions BS. Well, have you read a disclosure statement from a credit card recently? My last full disclosure statement was at least 8 pages of 6 or 8 pt type printed in a medium dark grey on non-white paper for starts. I have a college education, with some accounting and finance included. I have trouble understanding it all, and there are terms I am sure I do not understand fully. How about you? In any case, do you really expect everyone to understand that?

It of course started with a good idea, that terms needed to be disclosed in understandable language. The thought was 2 or two pages in plain language, but it has been subverted by the industry into page after page of legalese, fine print and finance speak. Essentially obscuring meaning by over supply of information. There have been a number of articles and studies done on this, most finding that about 2/3 of the participants actually understand less than a quarter of these disclosures. This included persons with education past high school.

Oh, and when were those days?



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Re: Need a Loan?? Yikes!!!
Posted by: GGD
Date: August 16, 2008 10:50PM
Perhaps the solution to all of this is competition. Maybe us forum members should start a similar business, but charge "only" 75% interest, and put those 100%+ crooks out of business. smiling smiley

I do wonder what that place does if you can't pay? Do they send Vinnie over to repossess some fingers?

I think that if government regulations were to drive lenders out of business, and there was still a lot of demand for those types of high interest loans, you'll see what typically happens when there is demand for something that cannot be obtained legally. Organized crime will supply whatever is needed.
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Re: Need a Loan?? Yikes!!!
Posted by: Paul F.
Date: August 16, 2008 10:50PM
With all respect (to all here!);
The attitude that "somenone has to DO SOMETHING... those poor people! Those EVIL lenders!" is clouding some other folks thinking.

"Doing something" to "help" has fscked up more things in this country than the practices of lenders.



Paul F.
-----
A sword never kills anybody; it is a tool in the killer's hand. - Lucius Annaeus Seneca c. 5 BC - 65 AD
----
Good is the enemy of Excellent. Talent is not necessary for Excellence.
Persistence is necessary for Excellence. And Persistence is a Decision.

--

--

--
Eureka, CA
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Re: Need a Loan?? Yikes!!!
Posted by: rgG
Date: August 16, 2008 10:58PM
"Doing something" to "help" has fscked up more things in this country than the practices of lenders.


I don't know. The current housing situation is a pretty good example how unregulated lenders can really F things up.





Roswell, GA (Atlanta suburb)
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Re: Need a Loan?? Yikes!!!
Posted by: JoeH
Date: August 16, 2008 11:11PM
Paul, it is not so much "DO SOMETHING" as level the field. The reality is that we as customers do not negotiate anything in most credit situations, we either have to take what is offered or not at all. Right now they can even change the terms afterwards. Seems at least 2 or 3 times a year I get a notice of change in the terms for my cards. I can either accept them, or if I turn them down the account will be closed. No choice in between. At this point the only way we get choices in between is through the government.

As for your statement ""Doing something" to "help" has fscked up more things in this country than the practices of lenders", I have to agree with rgG. Also it is another thing you have bought hook, line and sinker. Sure, there have been times it has gone wrong, but there are many more examples of it working. In spite of anything Ronny Reagan tried to imply with his famous line about government and help.



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Re: Need a Loan?? Yikes!!!
Posted by: Kiva
Date: August 17, 2008 01:00AM
Quote
Paul F.
And what will you folks in favor of usury laws whine that "they" should do when the economy collapses due to the unavailability of credit of ANY kind when financial companies can no longer make a profit and get out of the business?

Instead, teach people to read and do simple math... and if they still want to do something that stupid... let them pay the price (so to speak).

I agree, Paul...people should know better. But, the bottom line is that there will *always* be victims for these people, be it plain ole stupid, mental ill, cognitively challenged, etc.

So, as a society, what is our duty to protect these people? Should we just let darwinism take it's course? Or should we realize that we are all interconnected and what happens to one of of brethren impacts us in ways we can sometimes observe and in others that are harder to quantify.

it's the whole conservative / liberal argument veiled in another cover..

and to say that forbidding sharks like this will result in other people in the credit business is a bit too much "slippery slope" for me..

kiva



----------------------
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Re: Need a Loan?? Yikes!!!
Posted by: bfd
Date: August 17, 2008 01:12AM
One big problem here is that as Paul suggests, we don't educate people to understand a financial boondoggle when they see it.

But to take it one step further, as mentioned, these "Pay Day Lenders" are merely the extreme case of what we all endure to a somewhat lesser extent.

The Federal Reserve is not a government entity. It's a club of very wealthy, very wise and very protected people. Our Mortgages, taxes, and other fine liabilities are their assets. When they need more money, they just pick up the phone and the US Treasury says "Cool, we'll print more paper for you". At that level, it is really just a game.

Kiva is correct when he notes that as individuals we all share in the game, with many of us benefitting in different ways (like having a roof over our heads and 911 when there's a problem). For those who do not share in the game, the really impoverished, there's really no game for them.

Surprisingly, many of the clients of these Pay Day Lenders are just normal folks who don't have anywhere else to turn when they run out of money. Having no credit history, no property to speak of, and no one to lend a hand, it's their only recourse. Yeah, they should've known better, or they should know better or whatever.

Instead of making all 8th graders take algebra, maybe we should think about having all of them take some economics courses to learn how our system works.
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Re: Need a Loan?? Yikes!!!
Posted by: Mike Johnson
Date: August 17, 2008 02:57AM
Poverty's expensive.

I said it before, but I guess it bears repeating. There are people in this country who are so desperate that they're just trying to get through the next couple days; what happens next year is unimportant. They'll make desperate choices. And you know what? Some people find them selves in dire straits through no fault of their own.

Payday lenders grind poor people up. One desperate choice, and they own you. They create a cycle of debt that is very hard to escape. 400, 500, 800% interest is not some sort of credit lubricant that keeps our economy running smoothly. It's bloodsucking.

Some of the people who've been hurt by payday loans are the men and women in the military. They're underpaid, and their bases are surrounded by payday loan shops. Borrow $500, owe $575 in two weeks. It got so bad Congress finally made it illegal to make payday loans to anybody in the military.

Shame on anybody who assumes all desperate people did something stupid to get there and keep doing stupid things to stay there. Poor does not equal stupid.
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Re: Need a Loan?? Yikes!!!
Posted by: S.Taylor
Date: August 17, 2008 09:24AM
Seems to me that the whole reason we have a government is for mutual protection. It's just a matter of to what degree do we need to be protected.
We could just as easily say "well, anyone stupid enough to walk through that neighborhood at night deserves what he gets", right? All kinds of fraud could be brushed aside as simply the problem of someone stupid. But we don't brush these kinds of things aside.
It's all about protecting the weak from the strong, whether it's physically strong or mentally strong or financially strong.



This remote controlled tree is a must for the person who wants to be on the cutting edge of Christmas technology.
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Re: Need a Loan?? Yikes!!!
Posted by: Gutenberg
Date: August 17, 2008 09:54AM
There are plenty of good lenders. Reasonable regulations would allow those fish to swim freely while controlling the sharks.
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Re: Need a Loan?? Yikes!!!
Posted by: Lee3
Date: August 17, 2008 03:11PM
What would you put the top rate at?
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