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1 posted on 02/17/2005 5:39:10 AM PST by A. Pole
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To: Willie Green; Wolfie; ex-snook; Jhoffa_; FITZ; arete; FreedomPoster; Red Jones; Pyro7480; ...

Free market usury bump.


2 posted on 02/17/2005 5:39:41 AM PST by A. Pole (Hush Bimbo: "Low wage is good for you!")
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To: A. Pole

You would have to be insane to do this.


3 posted on 02/17/2005 5:43:19 AM PST by TXBSAFH (Never underestimate the power of human stupidity--Robert Heinlein)
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To: A. Pole

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.


4 posted on 02/17/2005 5:52:04 AM PST by sgtbono2002
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To: A. Pole
The loans, defined in state law as pawn transactions, are made in exchange for a car title and a spare set of keys. They come at a hefty price: 25 percent interest a month, which works out to an annual rate of 300 percent.

The people who would get a loan under these conditions are the same people who blow their welfare/SSI checks at the casinoes every month.

5 posted on 02/17/2005 5:52:59 AM PST by E. Pluribus Unum (Drug prohibition laws help fund terrorism.)
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To: A. Pole

Criminy some people are stupid, but usury laws should be all over this guy. What a pity.


7 posted on 02/17/2005 5:56:48 AM PST by Centurion2000 (Nations do not survive by setting examples for others. Nations survive by making examples of others)
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To: A. Pole

One the one hand, I can see the need for places like this... When someone with no credit needs some money to get by for a short period of time, it can be helpful, but at the same time, it can be a trap.

On the other hand, due to the fact that the loan company is working with people with either bad or no credit history, it is inherently a high risk business. So they should be allowed to charge higher interest rates.

On the other hand, lending laws of the states should be such that if a car is repossed and sold off, after documented expenses, any remaining funds should revert back to the person who was the owner of the vehicle. And there should also probably be rules giving the owner a chance to try to get the vehicle back before it can be disposed of. Possibly a "waiting period."

All in all, it's an ugly situation. I had to work on some computers at a "payday loan" company once, and I saw the loan contract. IIRC, the APR works out to about 400%, due to the high interest rate and short terms of the loans (2 weeks).

Mark


8 posted on 02/17/2005 5:57:24 AM PST by MarkL (That which does not kill me, has made the last mistake it will ever make!)
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To: A. Pole

Debt will crash this nation. A sign of the times.


10 posted on 02/17/2005 5:58:40 AM PST by dennisw (Seeing as how this is a 44 magnum, the most powerful handgun in the world .........)
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To: A. Pole


Yeah, the guy's a shark. But we need laws to reduce his interest rates why?? There's an easy way to avoid the bite. Don't borrow from the guy. Or if you do, don't borrow more than you pay back. Quickly. That's too demanding a set of requirements for grown men and women?


12 posted on 02/17/2005 6:06:27 AM PST by Timm
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To: All
It is five times as high as Georgia allows for most regulated loans.

Someone please explain how the state has any right to interfere in an arm's-length business contract. Recently, my state's A.G. has been threatening to regulate (or eliminate) payday loans because the interest rates -- plainly stated in black-and-white on every such contract -- are "too high."

The nanny state reigns.


13 posted on 02/17/2005 6:09:42 AM PST by newgeezer (Just my opinion, of course. Your mileage may vary.)
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To: A. Pole

Those title loans places are all over my hometown. Me and my uncle always joke about opening up a title loan/bail bondsman/used car lot someday .. we figure we'd be rich in no time! :P


14 posted on 02/17/2005 6:11:17 AM PST by somniferum
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To: A. Pole

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.


26 posted on 02/17/2005 8:20:06 AM PST by B-Chan (Catholic. Monarchist. Texan. Any questions?)
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To: A. Pole
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.

29 posted on 02/17/2005 11:33:52 AM PST by wayoverontheright
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To: A. Pole

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


37 posted on 02/17/2005 10:50:57 PM PST by WestVirginiaRebel ("Senator, we can have this discussion in any way that you would like.")
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To: A. Pole
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.

39 posted on 02/18/2005 5:03:44 AM PST by Lazamataz (Proudly Posting Without Reading the Article Since 1999!)
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To: A. Pole

There is a line between a market driven industry and consumer exhortion.

Of course, there is the aspect that no one out a gun to these people's heads and forced them to pawn the titles.

That being said, the hypocrisy of the our governments amazes me.

By laws passed "for our own good":

We must wear seatbelts.
We must carry auto insurance.
We must not use cell phones while driving.
We must not allow smoking in a business we happen own.
We cannot light up in public places-parks, the beach, etc.
We must be carded to by a mixed drink regardless of our age. (In Alpharetta, were this man lives, everyone must be carded--even if they are seniors. If you take 80 year old Grandma out to dinner, Grandma cannot have that glass of wine if she forgot to bring her ID. That may have changed, I stopped eating in Alpharetta when they passed that stupid law. Took my $$ elsewhere.)

The hypocrisy is our governments pass laws restricting our activities "for our own good" yets turns it's head when oversight is needed. It's all about the $$$$$$.


46 posted on 02/18/2005 5:39:41 AM PST by Protect the Bill of Rights
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