Posted on 02/23/2014 8:22:16 AM PST by Son House
Remembering the Great Recession ended in June 2009,
WHY are the "demand for these loans doubled during the Great Recession, from 170,000 loans in 2007 to 350,000 in 2011",
BECAUSE the Jobless Recovery that started July 2009.
Well, the Pawn shops here are whittle pretty clean of inventory, seems more Minnesota Democrats are laughing after another hit and run on the private sector...seems pawn shops must now hold the merchandise they get for 90 days after the last payment. It used to be 30 days, which now the cost of storage will be another 60 days added to the customer price, because you know whose going to pay it, if it is even a feasible business model anymore.
And how about that clueless Minnesota Public Radio Daily Circuit host Kerri Miller, bragging about how Gov Dayton has improved the economy in Minnesota better than Scott Walker has done in Wisconsin, only to be punk'ed by her Republican guest because she wasn't aware Dayton had only improved the government sector, and probably as national Unemployment numbers, a manipulation has been done decrease the number of available jobs to show a decreasing Unemployment number. Some advice, sure to be ignored, better do your homework before being a hack for a Democrat, Ms Radio Talk Show Host. Next you could do a show on why "Demand for high-interest payday loans soars in Minnesota"...being Dayton has improved the economy so much...
Good! Let the fine people of Minnesota get exactly what they asked for.
Let's call it about 10% profit on the $100M they are sitting on to loan out after expenses, roughly ballparked.
My first car loan was in 82, and my bank at the time made way the hell more than that on what they loaned me per year, and they had the car as collateral.
I wonder what the default rate is, and how many they make that just up and close their account and walk away. Pretty high risk on what they do.
(I hate the practice myself, don't get me wrong, but there will always be a market for loans like this and a fool and their money will soon part no matter how much regulation they put in place)
The mafia doesn’t like “legal” competitors, LOL
Yep, got a Quicken Money program long ago that helped me account for every penny and I will hopefully never need a high interest or any other loan. If there’s a demand and someone is willing to take that risk, they should get whatever reward the “customers stream into any one of some 100 storefronts” FREELY agree to.
Years ago when my guys did it in New York it was illegal. Now its OK. How times change.
D.C.
There were some TV ads running recently from an Indian tribe that is in the payday loan business. The loans were unsecured up to 10K and I paused the screen to read the fine print - the interest rate was over 80%.
“”Western Sky has interest rates upward of 300 percent. It is able to skirt the law because it is Native American-owned and it operates completely on a Native American reservation, distributing loans online. While Native American tribes must abide by federal U.S. laws, tribal sovereignty allows them to ignore state-specific laws.””
http://www.debt.org/2013/02/25/western-sky-predatory-lending/
The "legal competitors" in the case of these Cash for Car Titles and payday loan operations are indirectly the larger banks which fund them. Although, I read that Wells Fargo was phasing out their involvement. This recalls the line from the Threepenny Opera "What's robbing a bank compared to owning one?".
Interest 80%——awful,yet people will still avail themselves of the service.
Didn’t any of these people save for a rainy day?
What about all the free stuff that is available? I would think that would take care of basic needs,making a loan unnecessary.
.
Loan Sharking.
Gov’t should give free lottery tickets instead of food stamps. /s
legal usury... and the RATS complain about credit cards, feh
here’s the whole explanation;
"It is truly mind-numbing to hear pseudo-intellectuals parrot the same old myths about payday advances year after year, despite their lack of truth. First, payday advance companies are thriving because banks refuse to make $200 loans to their depositors in violation of the Community Reinvestment Act mandating that banks serve the credit needs of communities where they source deposits. Yet payday advance companies get criticized for filling this gap whilst banks get a free pass in denying credit to their customers.
Second, applying an annual percentage rate on a two-week loan is sheer lunacy. It is about as helpful as being quoted a rate of $73,000 a year for a hotel room instead of $200 a night.
Third, payday advances do not trap vulnerable consumers in a viscous cycle. The vulnerable consumers are already in that cycle when they walk into the store. And their financial condition was aggravated by their banks’ refusals to give them loans. The majority of payday advance users simply need temporary help making ends meet, or meeting an unexpected life event.
Lastly, the growth of non-bank financial intermediaries such as check cashing outlets, community currency exchanges, payday advance companies, pawn brokers and the like is a direct reflection of consumers’ growing dissatisfaction with banks. The FDIC’s most recent survey of unbanked and underbanked households shows that both groups continue to grow. In addition, over 800,000 depositors left the banking industry between 2009 and 2011. Interestingly, a substantial portion of these “debanked” consumers appears to have substituted prepaid cards for bank accounts.
If consumers were really as unhappy about payday advance companies and other money service businesses as consumer activists claim, they would have ceased to exist long ago.”
Somalis. Most of the 40,000 Somalis here don’t have regular bank accounts.
Interactive map: Minnesota payday lending locations and poverty level
http://www.minnpost.com/data/2013/01/poverty-level-and-payday-lending-locations-mapped
“In 2011, the top five industrial loan companies issued 247,213 loans totaling $98.7 million. Among them, Payday America, Unloan and Ace Minnesota earned about $6 million, $3.3 million and $1 million respectively from 2011 operations, according to their reports to the Commerce Dept. “
About a ten percent profit.
Doesn’t sound predatory to me at all.
Though it’s foolish to take any loan absent a compelling reason.
Thanks for the link - I think even the mafia would be embarrassed charging that rate.
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