Lender takes all in repo cases

Atlanta Journal-Constitution ^ | 01/30/05 | Alan Judd, Carrie Teegardin, Ann Hardie

[A. Pole]

So, you don't like the Biblical method of working off one's debts?

You mean this?

"At the end of every seven years thou shalt make a release.
And this is the manner of the release: Every creditor that lendeth ought unto his neighbour shall release it; he shall not exact it of his neighbour, or of his brother; because it is called the LORD's release." (Deu 15:1-2)

[MarkL]

By whom? You might be able to convince me that the state should be allowed to mandate that lenders follow some standard method of stating the effective annual interest rate on the loan application. But, as far as any limitations on the rate itself, that's for the lender and borrower to decide.

No, I feel that the state is within its powers to regulate these sort of financial dealings... And that the state should mandate that the contracts clearly state the APR and other terms of the loans. One nice thing about MO's law is that the APR is perfectly clear on the loan paperwork. It's not buried in "the fine print."

Mark

[newgeezer]

Yes. I like that. Those were the days.

[Iwo Jima]

It's too bad that these people who are having such a hard time of it don't seem to belong to any church. I say this because almost any church I know would help them out with the relatively small (but exceedingly personally difficult to them) things which drove (no pun intended) them to the loan shark in the first place. This is where friends, family, church, community prove to be so valuable.

[Buggman]

Its legalised theft. No wonder the Mafia is about out of business, most of their scams are legal now. Drugs and Prostitution is all they have left.

No, they still have the unions too.

[B-Chan]

This guy is a usurer. Brilliant, but a usurer.

The sort of people who sign up for loans like this are either terminally desperate or criminally stupid, or both. Still, it's no worse than running a pawn shop, at least from a legal standpoint. Yes, many people get into debt throught their own sloth and poor planning, but for most, it's a matter of go into debt or don't work -- because in most American cities you have to have a good car in order to be employed. And once you're in debt for that car, you are a hostage. Lose your job, get sick, or suffer an injury, and suddenly the collection man is on the phone, the repo man is in the drive, and the sherriff is at the door with an eviction notice.

Loan sharks like this guy are all the more reason to support urban reform movements -- the kind that encourage people to live in densely-populated communities, places within walking distance or an easy bus or tram ride from their job. Why should a person be forced to own a car ( = rack up big debt) in order to simply live?

But they do. For the average working-class American, the ideal of living a middle-class lifestyle without access to retail credit is a fantasy. Retail credit lenders are like a company store from the Industrial Age -- they're the only game in town, and they know it. Saying "Well, sir, nobody forced you to borrow all that money" is the same as saying "Well, sir, nobody forced you to shop at the company store": it may make sense from a purely fiscal standpoint, but from the standpoint of human dignity it is insupportable -- the kind of thing that gets people hurt. Nobody is going to just sit and watch his kids go hungry.

A society that allows situations like this to occur might as well bring back debtors' prisons -- even a prison cell beats sleeping on the streets. If we as a civilization are going to permit usury, we must also mandate complete debt forgiveness every seven years, or risk turning the economy into one big "company store". It's damn close to being one already.

This guy has made his wad; if I were him, I'd sell the whole thing to some giant asshole corporate bank and retire somewhere warm, sunny, and beyond shotgun range.

[meadsjn]

Someone please explain how the state has any right to interfere in an arm's-length business contract.

While you're following that train of thought ...

Why would the state have any right to interfere when a dissatisfied customer caps one of these thieving clowns?

The answer is simple: somebody passed a stupid law that says it is illegal to kill someone else, even when they really, really need killing.

That's not just government interfering with business -- that's interfering with good social work.

[newgeezer]

So, if I (being of sound mind, etc.) agree to borrow $500 from you today in return for paying you... oh, let's say... $550 tomorrow, you "need killing"?

Yep. I better go running to my Uncle Sam. Somebody took advantage of poor little defenseless me. Boo-hoo.

The nanny state reigns.

[wayoverontheright]

I'm familiar with "distressed credit" loans. Having worked in the automobile industry for 20 years, I can attest that statistically, people who have car titles WHICH HAVE NO LIEN, AND have bad credit, are a statistically small cohort.

If these people had a car title to a vehicle of appreciable value, then they simply would not be relegated to borrowing at such a disadvantage, their car title would be one of their most prized assets, and they would never enter into an agreement of the type described in this article, without asking questions as to what would happen should they default.

This is a hit piece on business in general, and the small loan industry in particular. If you loan money to someone who has the bottom-wrung type of credit which has limited them to a pawn shop, then you as the lender must derive a higher than normal rate of return to compensate for inevitable losses. A mere $125 for handing this person $500 is not exhorbitant because of the risks. My knowledge of this type of borrower is that your having the car title and an extra set of keys simply will not suffice to insure easy repossession of your collateral. They move, they change ignition lock keys, and in this case, they can go to a neighboring state, retitle the vehicle, and you, having not gone to the expense of recording a lien, are stuck.

We cannot repossess a car without refunding any overage to the customer, there have been million dollar settlements in these matters from Ford Motor Credit, GMAC, etc., in the past, and they have learned their lesson.

If people are using this "pawn" type of loan, then it is because they cannot get a loan elsewhere, thus one must conclude the lenders here are performing a service, IMHO.

If this type of business is so lucrative, one wonders why the market doesn't attract more players, the author of this article included.

[fallujah-nuker]

Proverbs 14:31; He who oppresses the poor shows contempt for their Maker, but whoever is kind to the needy honors God.

[Nowhere Man]

Its legalised theft. No wonder the Mafia is about out of business, most of their scams are legal now. Drugs and Prostitution is all they have left.

Hrh, you took the words right out of my mouth, err keyboard.

[Nowhere Man]

Freemarketeers and diversity types work together on dismantling Western civilisation.

I think it was Lenin, perhaps Marx, but I think it was the former said, "we will sell them the rope to hang themselves with."

[XBob]

18 - It appears that you have found the source of incomes of many of our self employed "free-traitors" here on the FreeRepublic.

[Nowhere Man]

But they do. For the average working-class American, the ideal of living a middle-class lifestyle without access to retail credit is a fantasy. Retail credit lenders are like a company store from the Industrial Age -- they're the only game in town, and they know it. Saying "Well, sir, nobody forced you to borrow all that money" is the same as saying "Well, sir, nobody forced you to shop at the company store": it may make sense from a purely fiscal standpoint, but from the standpoint of human dignity it is insupportable -- the kind of thing that gets people hurt. Nobody is going to just sit and watch his kids go hungry.

A society that allows situations like this to occur might as well bring back debtors' prisons -- even a prison cell beats sleeping on the streets. If we as a civilization are going to permit usury, we must also mandate complete debt forgiveness every seven years, or risk turning the economy into one big "company store". It's damn close to being one already.

This guy has made his wad; if I were him, I'd sell the whole thing to some giant asshole corporate bank and retire somewhere warm, sunny, and beyond shotgun range.

Yeah, my friend, we seem to be headed that way. I once made a statement as far back as the mid-1980's that for our nation to survive the debt balloon, we must have some sort of Day of Jubilee borrowed from the Bible where any and all debt is forgiven and everyone starts anew. Don't ask me the logistics, it was just an idea I brainstormed. Back then, I suggested the year 2001 as the date but we are past that now, maybe 2010 or 2012?

I don't advocate violence in any forms but I know human nature. If I was this guy, I would do what you suggest, sell out and retire somewhere obscure. People who haven othing to lose, well, they might not take to this guy too kindly and it seems like he can accumulate a lot of enemies. If I were him, I'd be sleeping with my eyes open (as my father says about the time he was stationed in Korea in the mid 1950's, I've done it too) and a shotgun next to me.

Well, people do need cars but there are ways to get a good set of wheels even if they are not the latest, but we are getting a little off base here but I do agree with you that this is getting out of control.

I think of it this way, it is like a computer running Windows 98 (or choose your favorite OS, even my old Apple in (Apple) DOS 3.3 was the same) where you have the computer running without a reboot, it gets slow, stupid, retarded, programs start to crash, you get errors and so on. Maybe economically and other ways, we do need to reboot the system.

[wideawake]

It's not usury if the interest rate is compatible with the risk taken by the lender.

[Cultural Jihad]

Usury by definition is the loan process initiated with the goal of taking over another person's assets.

[WestVirginiaRebel]

Jeeze, it almost makes you long for the old days when all they would do is break your legs if you couldn't pay...

[A. Pole]

It's not usury if the interest rate is compatible with the risk taken by the lender.

Then by your implied definition the interest 15% on credit card is a usury if the risk "uncompatibly" smaller (like 1%). Is it?

Anyway these guys seem to get rich very quickly what suggest that the interest they charge is MUCH higher than the risk.

[Lazamataz]

The cost is high and so is the risk for borrowers who post car titles as collateral for quick cash.

Having had had a little experience in the Georgia drug culture, when I first got here and before I found Recovery, I can tell you with a great amount of assurance that this industry is largely set up to prey on people in active addiction.

The sooner it is SERIOUSLY regulated, the better.

[Lazamataz]

Its legalised theft. No wonder the Mafia is about out of business, most of their scams are legal now. Drugs and Prostitution is all they have left.

Well, with prescription drug benefits, the only one left is prostitution.

Oh wait: Politicians.