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app103:
The reason the rates are so exorbitant is because of the failure rate of the loans.  And the repossession is not really wanted; the fees to do so merely allow the businesses to stay afloat- the interest rate on the people who make good on the loans are what keep the businesses going.
-wraith808 (May 22, 2009, 07:12 PM)
--- End quote ---

There are companies that exist solely to give out loans to people they hope can't pay them, just so they can take their cars, which greatly exceed the value of the loans. That's the reality of the situation. They only make loans to people with cars, the only collateral they accept are cars, and they only give small loans.

They stock their used car lots with all the repossessed cars and make a fortune selling them lower than anyone else in town. Essentially, they are getting tons of cars dirt cheap.

And if by chance the person does manage to pay off the loan, the company actually makes less money, even though the interest rates they are charging are unreasonably high.

How much more profitable is it for one of these companies that owns 50 car lots to only get $400 on a 7 day loan of $300 vs. getting a car worth $5000+ that they sell for $2500?

That's $100 profit vs. $2100 profit, in case you didn't want to do the math.

And how fair is that to the guy that owns the used car lot down the street that acquires his cars honestly, from people that actually sell the cars to him, and can't compete with the prices offered by the loanshark lots?

I can't believe anyone would think this is right.

wraith808:
So then if your car is about to get repossessed, or your gas or power shut off, or you're about to get evicted and have nowhere to go with your wife and kids, and just need a little to pay today and you're going to get paid next week, what are you to do?  You can't get a conventional loan, and all of your friends and family are in the same situation...

And what you're talking about only applies to some of the locations- when I had to do it, I had to put up something for the collateral, and I just used a VCR I had sitting around and couldn't sell.  So you can't judge a service based on the worst offenders, can you?

Stoic Joker:
So you can't judge a service based on the worst offenders, can you?
-wraith808 (May 22, 2009, 11:25 PM)
--- End quote ---
When the "Worst Offenders" comprise the highest percentage of the target group ... sure I'm ok with it. And so is Florida (where I live...) which cracked down on them just a few years back for their borderline criminal practices.

Just because a company isn't a front for the mob, doesn't mean they can run their operation like a carnival midway ... loansharking is a crime reguardless of who does it ... even if their name isn't Vinny, Tony or Guido.

wraith808:
And then what about the first part of my statement?  What about the people who actually need the service?  And are they the highest percentage of the target group?  Is that actually a provable statement?  Or is this just based off of news exposes where they attempt to get their target audience?

I'm not saying that the ones with predatory practices don't need to be reined in.  I'm just saying that it's not as cut and dried as people want to make it.

Stoic Joker:
Why not? Complicate the simple & simplify the complex has always worked for me. It's sort of a can't see the forest for the trees thing. Too much minutia clouds the central issue of, is it a good solid business practice to kick the shit out of somebody when they're down. ...My answer to that is no (and I bet yours is too...).

Did these (check cashing/payday loan) companies start with the "good intent" of helping folks out? Sure. But the (predatory lending) bottom line got too enticing & greed kicked in.

Hence... Florida targeted several state wide "bad apples", and the ripple effect ended up taking out a huge portion of other companies that were equally as bad but didn't "stick out" enough to make examples out of. Many on the local companies that provided that "service" closed or were "restructured" in the wake of the rules that were put in place to prevent down-on-there-luck folks from being financially raped.

The CC companies are getting vilified now for much the same reason. 90% of them are in Delaware for the simple reason the Delaware has No regulatory control over lending practices ... Now tell me that action don't look just a bit suspicious...

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