Payday
February 15th, 2008 by Peter SudermanVirginia blog Leesburg Tomorrow is complaining about FreedomWorks’ support for payday lenders in Virginia.
[I]n effect it is the special interests of payday lenders who are out to take away your financial livelihood. Remember, this is an industry which has made up to $5,000 on a $300 loan off of a low-income warehouse worker, thanks to the loan being rolled over every payday for five years. It is the practice of biweekly loan rollover that the compromise bill in the Assembly seeks to stop, and that is the element of the legislation the payday lending industry wants to kill.
Individuals have many excellent financial options, without resorting to payday loans.
So, because of a few cases in which an individual didn’t pay back a loan in a timely fashion, and thus had to pay the agreed-upon fees for non-repayment, the entire service should be outlawed? Look, payday loans aren’t a great option for everyone, but sometimes they’re the best option available.
Even the “evidence” provided by LT makes the case for me. The link for “excellent financial options” talks mainly about credit cards and bank loans. But payday lending services are used heavily by people who, because of their credit or financial history, can’t get either. Not everyone has the option to get an easy, low-rate loan. Legislators shouldn’t try to use the law to take other options away, leaving them with even worse options — like not paying bills entirely or bouncing checks. (Fees on bounced checks, for example, typically result in APR’s of about 2,800% — far, far higher than the 390% average APR of a payday loan.) The end of the linked article even suggests that payday loans may, in some cases, be an option for certain people, and that the trick is in taking responsibility for understanding how the loan works and how one’s finances are managed.
More to the point, the existence of unregulated payday loans actually seems to improve credit stability. A staffer from the Federal Reserve Bank of New York looked at the industry and found first that the practice cannot reasonably labeled “predatory,” and, even more importantly, that in states with unregulated payday loan industries, households with unstable incomes are actually less likely to have missed loan payments.
Not that I expect any of this to stop the braying about the evils of payday lenders.
February 15th, 2008 at 1:18 pm
Couldn’t agree more, Peter. When I was a $150/wk. dishwasher, these services saved my heat more than once. On the surface, I don’t have a huge problem with them capping the rate the industry can charge–we have usury laws for a reason–and the new bankruptcy bill gives them enough protections that they shouldn’t need to charge big rates anyway. (At the same time, provided there’s healthy competition in the market, why do it? Let ‘em charge what they want.) But restricting the individual’s access to them is stupid and anti-American.
February 15th, 2008 at 7:10 pm
Weird that all agree here. There is no point on banning anything on “moral” grounds. This is like banning gambling, where the goverment thinks it knows better than you, although it might be so, we can’t remove the element of darwinian selection going on here. If I need access to a quick credit in order to save my life, so to speak, then it does not matter if I have to sell one of my kidneys for that purpose, or prostitute my body or agree to give my first born child as collateral (well I am exagerating here). The fact of the matter is that individual responsibility is a must and if I sign a contract where it is very clear that I will have to pay 400% interest on the loan, so be it.
Now, another point about financial institutions, one thing that I hate the most about ATM cards is that the banks will usually allow you to draw more than you have in the account, lets say you have 199 bucks and you get 200. Then the back wil charge 35 dollars on that extra dollar that you had to borrow. That is really a rip off (like 3400% interest no?).
February 15th, 2008 at 8:24 pm
This is ridiculous. 390%?!?! There are mobsters in jail for loansharking that must be shaking their heads when they look at the way a lot of loans are being administered in this country currently. It’s insane & way, way out of line.
February 16th, 2008 at 5:33 pm
I’m willing to bet that we agree with these bloggers on a lot of things. We definitely have different philosophies on government than they do. They’re free-market fundamentalists and we’re more classical-liberal realists.
The problem is that they paint themselves as the classical-liberal realists and probably consider us to be far-left whackos. That’s why I spend a lot of time in my posts here trying to keep them honest.
I’ve noticed a real uptick in the quality of the blogging here since we began posting, and I give these guys (well, Peter and Kinnan, at least) kudos for really trying to elevate the discourse above their usual high-partisanship. Peter’s last few posts have been his best, imo.
And that’s good, because I’m finally starting to see how smart and reasonable these guys can be when they’re more committed to writing about real facts and ideas instead of acting like a mouthpiece of a lobbying organization. They have their main website for the latter, and it’s been a pleasant surprise to see this blog become closer and closer to the real spirit of its name.
February 16th, 2008 at 5:35 pm
By the way, I don’t mean the term “free-market fundamentalist” pejoratively. I just couldn’t come up with another way to describe it, and “Randian” isn’t really fair, either. If anyone has a better idea I’m all ears.
March 4th, 2008 at 6:28 pm
A multiBanca®, empresa de consultoria financeira, iniciou a sua actividade com a abertura de uma agência em Lisboa, Benfica.
O conceito da multiBanca® surgiu da necessidade de criar um leque de alternativas de financiamento que possibilitem ao cliente uma resposta às suas necessidades. Como o próprio nome indica, agregamos vários serviços e entidades bancárias.
Na hora de escolher um produto de financiamento, o cliente é habitualmente confrontado com vários serviços que não se encaixam no seu perfil e/ou na sua economia doméstica. Para que isso não suceda a multiBanca® conta com profissionais de sucesso e elevada experiência no sector financeiro, cada caso é singular e a multipliciade de factores faz de cada cliente, único.
O endividamento da economia doméstica, o aumento das taxas de juro, as comissões e os prazos de pagamento dificultam opção de escolha quando se trata de encontrar a alternativa exacta para cada caso.
Na multiBanca® essa questão não se coloca porque a gama de produtos disponibilizados oferece ao cliente a melhor escolha possível para as suas circunstâncias.
Apostamos num crescimento responsável, sustentado num serviço individualizante que acompanhe o cliente desde a abertura do processo até á assinatura do contrato.