I was glad to hear someone is finally considering cracking down on predatory lenders. Predatory lenders are all those quick-cash, title-cash, payday-loan places that you see popping up in the cheapest storefronts all over town. They charge something like 200-1000% in APR interest. They are often identified as one of the worst financial mistakes anyone can make.
Their color schemes are offensive to our design aesthetics and their loan-shark schemes are offensive to our economic stability. I cannot understand how their 200-1000% APR rates are legally allowed, but somehow they’ve found a loophole. I thought loan sharks were illegal, but they must have a strong lobby.
If the government views these predatory lenders that setup shop outside military bases as preying on soldiers, why don’t we view the rest of them peppered throughout our city as preying on our citizens?
I remember last year one of these places had even setup a spot in the Zoo on Halloween, giving out their payday loan fliers in children’s candy bags. If I see another this year I swear I’m grabbing all their fliers and throwing them in the garbage. Try me!
Can and should Idaho Falls/Bonneville County ban these types of predatory lenders? Should we place a special tax on that group to fund the debt counseling services?
UPDATE: I thought I had written about last year’s Zoo trick or treat thing when the ‘Check into Cash’ predatory lender had set up inside. Here’s the story: http://idahofallz.com/2005/10/28/tricked-by-check-into-cash/
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Gato got runned over by Marcus many moons ago. Be ye daft, 2486? 
Let's have a new poll, alright, Joe?
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While I agree with most of the sentiments expressed in this post I don’t think an outright ban on these businesses is appropriate. Maybe there could be a limit to the interest rates charged. Or limiting the amount of times a person could use these services within a certain time period.
It is an unfortunate fact of life for some of us that our money coming in is not always in sync with our expenses, either in timing or in quantity. As with a lot of other things it all boils down to personal responsibility. I’m guessing that a lot of people spend too much on the lottery, should we get rid of it too?
This article hits home with me right now. I just purchased a vehicle a few months ago. I had to come up with a 6 month premium for full coverage insurance which took a lot of my cash. Then I had some home repairs come up that couldn’t be put off. And then some medical bills. I have been waiting for some money that should have been here a few months ago which I have been counting on. So now my car payment is due in 3 days but I don’t get paid for a week. I could come up with the money a few different ways, but I was just thinking this morning that a payday loan might be an option. I was going to do some research and find out what the interest rate was for one week. A few years ago I used one of these loans, and I think it was 10% per week. Which sounds like a lot, but to borrow $100 for a week and have to repay $110 is not a bad deal compared to some other options. The mistake is when people stretch their term out too long, or use these businesses on a regular basis.
I will agree that a lot of these businesses use predatory practices. And I found out when I used them before that they have different fees and rules so it’s a good idea to shop around.
So my postition is that it’s not my fault if some people can’t manage their finances better. I won’t deny that these businesses take advantage of some people. I believe that these operations should be much more regulated, but not necessarily put out of business. I am glad that I have the option to use these services if I feel like that’s my best solution.
I guess I should rephrase
‘ban’
instead as
‘cap the interest rates they can charge to a reasonable level of like 30%, thus driving them out of business anyways’
I can see the personal responsibility issue will be big in this debate. I agree it’s important.
People should take greater personal responsbility in their driving, in not giving unsafe toys to kids, in using fireworks and handguns, in their business dealings, etc. etc., yet those areas are all still regulated to help people out.
KIDK News 3 just aired a two-part series on these predatory lenders.
Hopefully they are permalinking now:
Part 1: http://www.kidk.com/news/6006361.html
Part 2: http://www.kidk.com/news/6006461.html
I wish Idaho Falls would put a ban these, or at least ban future ones, and perhaps regulate them more.
A good regulation would be forcing them to hang a large informational poster in their lobbies, stating their shocking APR, and the average interest paid on loans (vs. principal) for that establishment over the past 90, 180, and 365 day period.
I also saw the story on the news last night and I believe it’s a huge scam. They prey on the poor and then when they can’t afford to come up with the money to pay back the loan, they take your car away. The owner of all those loan stores in IF said on the news last night that they rarely take peoples cars away and they will always work out payment options with the customer before it gets to that point. YEAH RIGHT! That’s a load of crap. Even the women they were interviewing said she was one day late on her payment and they had already started reposession procedures to take her car away.
I went into the one on Broadway about 4 months ago to send some money Western Union and I was reading the interest rates they had posted on the wall, and it was 500 percent! I couldn’t believe that was legal! That’s like loanshark rates! (And coming from NYC, I would know.)
I’m fortunate enough that I’ll never have to use one of those places, but it made me sick to see that report last night about how they prey on people LEGALLY! When I moved to IF 3 years ago, I really couldn’t believe all the loan places here. It’s outrageous how theres one on almost every street corner in this town! I understand their in pretty much every town, but not to this extent. For being such a small town, I think they’ve gone a little overboard with these places. But obviously there’s a need for them here since their all still in business. But at 500% interest, this guys makin a killing so he can afford to have one on every corner.
Actually they prey on people’s ignorance. What is needed is good old education, and no one in their right mind would use them. Or at least not habitually. I have never used them.
http://www.ksl.com/?nid=148&sid=962585
Sandy, Utah, has put a limit on the number of these types of businesses that may operate, based on population. They’ll allow only one store per 10,000 residents — They currently have 10 stores, with a popoulation of 95,000.
That story noted Sale Lake City is “looking at a similar measure.”
I fully support Idaho Falls only allowing one “non-depository financial institution” per 10,000 people. I think we should also regulate their signage or appearance (the yellow ones are the worst).
How many total shops do we have right now in Idaho Falls city limits?
What does it take for this kind of city code change to happen? Does a city council member have to introduce it?
I definately think the signs they use seriously degrade the neighborhoods around them. Very unsightly!
I think you are all being a little bit unfair. I am a center manager for a Check Into Cash in Toledo, OH. The APR rates are just a number. They refer to the amount you would pay back over the course of one year if you continually took out the loan every two weeks.
Check Into Cash encourages consumer responsibility. We warn our customers ahead of time not to “get themselves trapped.” A payday advance is a short-term solution. It is not meant to become a substitute for their actual income.
My company is not predatory. We set a limit on the amount of money they are permitted to borrow so they are not in a position to have to come right back and borrow that money. True, there are some who re-advance the very next day but it is their prerogative.
Shame on all of you for attacking the industry! Do you attack banks for charging a $34 NSF fee? Who’s the real crooks here? Most of my customers (although they are not thrilled that they have to come in and borrow money from me) are appreciative of the help.
The APR is not just a number, it is the base standard for all loans. It does not matter how long the loan is, the APR is still the baseline comparison.
Banks do have some outrageous fees. Are you suggesting Check-into-cash has no fees?
Joe is right….it’s not “just a fee”. 500 % is a crooked business! You prey on innocent hard working people KNOWING damn well most won’t be able to pay back their loans, so they end up in a viscious cycle of readvancing just to pay back the interest on that loan and keep their cars from being repossesed!
And no….we’re not attacking the banks for their “insufficient fee” charges because that seems reasonable to most people. You bounce a check, than its up to you to pay the price. Most people, if they balance their check books correctly, know whether or not they have enough money in their accounts to be able to write said check, but people do it anyway and unfortunately thats the price you pay. YOUR business is a different story altogether. You make it attractive to the customer to come in and get a payday advance or a loan with their car title, knowing damn well the majority won’t be able to afford to pay you back due to your exhorberant fees! People like you are basically preying on the poor and uneducated.
Was it the fair credit act or the truth in lending act which mandated APR as the common denominator of all loans?
Before that, loan repayment terms were expressed in all sorts of crazy methods, per week, per month, per 15 day cycles, etc., in ways that made it very difficult for people to determine if the loan was fair or predatory. So yes, the APR is the de facto standard comparison method.
I thought about this overnight, and realized you are probably defensive of this because you apparently work at one of these places? It is natural to try justifying the practice because you do not want to think of yourself helping something evil, but we have all found ourselves in these kinds of workplaces at one time or another.
There’s no shame in trying to earn an honest buck, but listen to what critics say about your business model, evaluate it honestly if you would want your mother or grandmother to be a customer there. If not, try looking elsewhere for work, someplace you can be proud of working and you would be proud to have your mother and grandmother as a customer.
Good luck!
Do you all honestly believe the banks and credit unions do not “prey” on the ignorant? How do you think they make their income? From service fees. And what are service fees, but NSF and over draft protection fees.
Both institutions charge high NSFs on any amount that does not clear your account. Then you have daily overdraft protection fees from $5-$8 per day. Again on any amount you overdraft your checking account. Many banks will process your largest checks first before your deposits and smaller checks. Why, to cause their customers to overdraft their accounts.
One more thing. Try to find the fees and charges for a checking account or ask a branch person about them. You will learn that most branch people do not know what the charges are or how they are calculated. BTW, banks and crdit unions place their fees and charges deep within their agreements.
Cash advance companies have their fees clearly visible for the customer to see. A $100 loan has a $15 fee.
The fees you are talking about for banks such as NSF or overdraft fees are only charged if you write checks that can’t clear.
If you don’t want to pay those fees, make sure to balance your check book often and ensure you have money to cover the checks you write.
Seems pretty simple to me. If you don’t have the money there, don’t write the check and you won’t have to pay the fees.
Thank you curious for explaining that again. I didn’t think I made it that difficult to understand, but evidently I did. There’s a huge difference in NSF fees and the 500 percent interest some of car title loan places charge.
Keep your check book balanced, don’t trying “floating” checks until payday, and you wont have to deal with any NSF fee. Plain & simple!
Personally I don’t see how someone can defend a place like that, (car title loans) but that’s just me.