5 Businesses that prey on the poor

[bjl584]

5 businesses that rip off the poor - 1 - predatory lending - MSN Money

[photo]

Brian, you and I would never use those payday loan companies. But let's say, for some wild reason, we did one time. We'd most likely have the same reaction, which would be disgust at the interest and ourselves for getting into a situation where we were that desperate. We'd do absolutely everything in our power to cut expenses and save every penny so that our first payday loan would be the last. And that's how those businesses should operate -- they're there for people who screwed up but the interest rate is so exorbitant that it will teach them a lesson never to do it again.

However, some people don't learn. When that occurs, can we still call those companies predator? How far do we have to go to protect people against their own bad judgments?

[bjl584]

Originally Posted by photo

Brian, you and I would never use those payday loan companies. But let's say, for some wild reason, we did one time. We'd most likely have the same reaction, which would be disgust at the interest and ourselves for getting into a situation where we were that desperate. We'd do absolutely everything in our power to cut expenses and save every penny so that our first payday loan would be the last. And that's how those businesses should operate -- they're there for people who screwed up but the interest rate is so exorbitant that it will teach them a lesson never to do it again.

However, some people don't learn. When that occurs, can we still call those companies predator? How far do we have to go to protect people against their own bad judgments?

I'm aware of that. I never said that I agreed with every aspect of the article. I post these articles up for discussion.

[Joan.of.the.Arch]

I'd never heard of, #3, used car leasing.

[photo]

Originally Posted by bjl584

I'm aware of that. I never said that I agreed with every aspect of the article. I post these articles up for discussion.

My question is how far do we protect people from their own bad judgments? (It wasn't rhetorical.) I'd be curious to discover what you and others think.

[bjl584]

Originally Posted by photo

My question is how far do we protect people from their own bad judgments? (It wasn't rhetorical.) I'd be curious to discover what you and others think.

That's a complicated question. For instance, allowing abortions is essentially proecting people from bad decisions (disregarding medical issues and rape.) Welfare can cause people to not try to improve themselves and find work, the same way that extending unemployment benfits can. Payday loans just like credit cards can get people into a lot of trouble financially mainly because of personal decisions that weren't so smart.

The people that are truly in need due to circumstances beyond their control, yes, we should help these people.

The ones that keep making one bad decision after another, I'm not sure. I don't want to let them die in a ditch. So, what as a society do we do? You can only help people so much. At some point they need to help themselves. I hate to see my tax dollars and other resources being wasted on programs that don't work. But, if we just stopped these programs overnight, what would happen? It probably wouldn't be good. Thay need to be reduced gradually. More education?, faith? (even though that would cause a lot of people to disagree). God forbid, a complete family and not a broken home? It's a complicated answer. There isn't just one thing that can be done that would be a "fix-all."

as an indivual, all that I can do is try to help one person at a time. I've talked and helped close friends and family with various issues. Sometimes it works, sometimes it doesn't. But at least I tried.

[photo]

Originally Posted by bjl584

So, what as a society do we do? You can only help people so much. At some point they need to help themselves. I hate to see my tax dollars and other resources being wasted on programs that don't work. But, if we just stopped these programs overnight, what would happen? It probably wouldn't be good. Thay need to be reduced gradually.

I agree, as probably do most people. The real debate comes at where the dividing line is drawn. How often can people fail and get bailed out?

Maybe this isn't a good analogy, but compare a drug addict whom everyone tries to help, and those attempts fail time and time again. At some point, there is no help for the person and all attempts do nothing more than enable the person to stay where he is.

One thing that should be done, however, with any kind of financial contracts, is to spell out the terms and consequences in plain language so people will have no defense if they do not fulfill the terms of the agreement.

[bjl584]

Originally Posted by photo

Maybe this isn't a good analogy, but compare a drug addict whom everyone tries to help, and those attempts fail time and time again. At some point, there is no help for the person and all attempts do nothing more than enable the person to stay where he is.

One thing that should be done, however, with any kind of financial contracts, is to spell out the terms and consequences in plain language so people will have no defense if they do not fulfill the terms of the agreement.

A perpetual drug addict that can't be helped by government, church, friends, or family, will unfortunately end up dead. That is the unfortunate reality.

I agree on clear, easy to understand terms of contracts and agreements. A lot of people get lost in the language of exactly what they are agreeing to.

[disneysteve]

Originally Posted by photo

However, some people don't learn. When that occurs, can we still call those companies predator? How far do we have to go to protect people against their own bad judgments?

I understand your point but I have trouble justifying the legality of a lender charging 400% interest on a loan to anyone for any reason. It wasn't all that long ago that rates like that were illegal and society functioned perfectly fine. I'd see nothing wrong with the government bringing back usury laws to eliminate that practice.

[photo]

Originally Posted by disneysteve

I understand your point but I have trouble justifying the legality of a lender charging 400% interest on a loan to anyone for any reason.

400% conjures up images of a scowling fedora wielding a baseball bat down a dark alley!

[J. Spence Financial]

I would say that a lot of tax offices do this. They know the poor need their tax return right away and not know how to do it themselves. It is not uncommon for them to charge hundreds of dollars for something that really shouldn't cost anywhere near that much.

[Angio333]

They forgot tax prep places like H&R Block, Jackson Hewitt, and Liberty. They charge way more than a CPA or enrolled agent would for a similiar return. Not to mention they push refund anticipation loans, etc.

[SnoopyCool]

Refund anticipation loans (RALs) are a thing of the past as of the end of this tax season. Their elimination was done in a two-step process: Congress eliminated the debt indicator, then disallowed them totally.

That is a very good thing.

[disneysteve]

Originally Posted by SnoopyCool

Refund anticipation loans (RALs) are a thing of the past as of the end of this tax season.

I hadn't heard this. That's great! I never really saw the point anyway as it only takes 10-14 days to get your refund if you file electronically.

I wonder if the tax places will find some way to get around this.