Need $200?

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nobbie48

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You can borrow it from the nice folks advertizing on TV. They have a half price interest deal. Just give them $20 interest after 2 weeks. Keep rolling that over and the $200 original loan becomes $25000 at the end of the year.

But wait, it gets better. That's a half price deal. I tried calculating the accumulated interest at $40 ever two weeks and ran out of space on the calculator.

Are people that dumb and desperate? If so how do I meet them? I'd like to turn $200 into a $M and retire in a year.
 
4 words.

Criminal rate of interest

And besides, if anyone really needs to borrow 200 bucks its not like they are going to have a million to pay you by the end of the year.
 
How do you get those figures? If it's 10% interest every two weeks ($20/$200), and you compound that over a year, it becomes 1192% annual interest which means they will owe close to $2400 by my math.

If they asked for $40 every two weeks then I figure they'd owe almost $23,000. No?
 
fastar1 said:
How do you get those figures? If it's 10% interest every two weeks ($20/$200), and you compound that over a year, it becomes 1192% annual interest which means they will owe close to $2400 by my math.

If they asked for $40 every two weeks then I figure they'd owe almost $23,000. No?
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You're right, I goofed and calculated based on weekely not bi weekly. Still a criminal rate. It would take two years to get the millions. I can wait.
 
nobbie48 said:
You're right, I goofed and calculated based on weekely not bi weekly. Still a criminal rate. It would take two years to get the millions. I can wait.
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I'll be your first customer! :smilebox: When do i get my 200$ bucks?
 
Payroll loan places "lend" (it's your money after all) at a rate of $21 per $100 for a two week period. If you borrow the maximum of $1500 you will pay back $315 after two weeks. Roll that over each pay and you will pay $630 per month. You can lease a Cadillac for that.

Most people that use those payroll places are young and drive fancy cars, etc. I guess the adage of a fool and his money are soon parted might be an oldie but true.
 
bgfa said:
Payroll loan places "lend" (it's your money after all) at a rate of $21 per $100 for a two week period. If you borrow the maximum of $1500 you will pay back $315 after two weeks. Roll that over each pay and you will pay $630 per month. You can lease a Cadillac for that.

Most people that use those payroll places are young and drive fancy cars, etc. I guess the adage of a fool and his money are soon parted might be an oldie but true.
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If that's the case I don't feel as sorry for the victims. I pictured the clientel to be minimum wage earners with no bank account or credit history. Banks treat them like leppers so they have to turn to the vultures.
 
nobbie48 said:
If that's the case I don't feel as sorry for the victims. I pictured the clientel to be minimum wage earners with no bank account or credit history. Banks treat them like leppers so they have to turn to the vultures.
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An excellent movie about government and consumer debt: Maxed Out:Hard Times, Easy Credit, and the Era of Predatory Lenders (2006)

My favourite line was the Harvard Prof who said something like "Consumer lending is not just profitable, it is obscenely profitable". If you think those payroll places are owned by Mom and Pop outfits, check again.

Consumer bad credit is "purchased" by third party companies that use any method regardless of ethics to collect. They don't give a rat's a**who literally jumps off a bridge as long as they are paid. Many people commit suicide when they feel there is no way out. Why do you think the credit card companies are on College campuses ready to set the hooks into a bunch of broke students not ready for the responsibility?

No, the people that borrow from payroll loan outfits are not always minimum wage earners. In fact, it is usually the opposite. Some are people with steady, well paying jobs but who live hand to mouth and cash in Grandma's gold on pennies on the dollar too. They have never grown up and have eyes bigger than their wallets and no net worth just toys and stupid junk. Not that there's anyhting wrong with a toy or two, as long as there is balance right?

Some people have real issues with money and need help. Those I feel for. But the liquor store doesn't shut down because there are Alcoholics out there. Those people need support and to find help on their own.
 
bgfa said:
Payroll loan places "lend" (it's your money after all) at a rate of $21 per $100 for a two week period. If you borrow the maximum of $1500 you will pay back $315 after two weeks. Roll that over each pay and you will pay $630 per month. You can lease a Cadillac for that.

Most people that use those payroll places are young and drive fancy cars, etc. I guess the adage of a fool and his money are soon parted might be an oldie but true.
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don't speak if you're going to make up facts.
Most people whoo use these are individuals living pay check to pay check and make well below the canadian average
 
Fine, but if those people would save just ONE PAYCHECK by doing whatever it takes - no eating out, no cigarettes, whatever - so that they're not paycheck to paycheck any more, they would have extra cash in the long term by not paying the payday-lender places any more!

How do the payday-lender places get away with it? There are legal maximums on how much interest can be charged, and it's in the ballpark of what credit-card companies charge on their non-promotional cards.
 
the legal interest rate is 60 % but it only gets charged if the attorney general requests it.

its becaues there are lots of legitimate commerical transactions that are higher than that amount. * bridge financing for example*

money mart is definately above 60 % but because they have some benefit they aren't charged.
 
Fingolfin said:
don't speak if you're going to make up facts.
Most people whoo use these are individuals living pay check to pay check and make well below the canadian average
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I have worked in banks for years, in Loans and Mortgages although I do not any longer. My GF actually works at a payday loan place currently so I hear the stories and at least at her's that is the case a lot of the time. They roll in fancy cars and p*ss their money away. I have seen people have cabs waiting and then off to the beer store after they get their money. I am not suggesting I have seen it all, but I know a thing or two. People's net worth and Credit are based on their degree of responsibility and choices, not their income.

There is something called "The Payday Loan Act". I don't know all the details but it likely allows loanshark rates.
 
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Is that why we only see lots of money marts in the affuent areas of town?

:rolleyes:
 
Brian P said:
Fine, but if those people would save just ONE PAYCHECK by doing whatever it takes - no eating out, no cigarettes, whatever - so that they're not paycheck to paycheck any more, they would have extra cash in the long term by not paying the payday-lender places any more!

How do the payday-lender places get away with it? There are legal maximums on how much interest can be charged, and it's in the ballpark of what credit-card companies charge on their non-promotional cards.
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perhaps, but again we're making generalized statements without knowing any real facts. Unless you've walked in those shoe's its not fair to comment. It's like saying everyone on welfare is a lazy bum, or all homeless people are alcoholics and drug users.

i don't disagree what these companies do is a crime.
 
bgfa said:
I have worked in banks for years, in Loans and Mortgages although I do not any longer. My GF actually works at a payday loan place currently so I hear the stories and at least at her's that is the case a lot of the time. They roll in fancy cars and p*ss their money away. I have seen people have cabs waiting and then off to the beer store after they get their money. I am not suggesting I have seen it all, but I know a thing or two. People's net worth and Credit are based on their degree of responsibility and choices, not their income.

There is something called "The Payday Loan Act". I don't know all the details but it likely allows loanshark rates.
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define lots.
I'm not saying there are people who use the services that do so by making poor choices, but the majority of people who use it do so because they feel they have no choice.

we should avoid the paintbrush affect. It marginalizes what these companies do and get away with (to your point, 'the payday loan act', is as you said, a loanshark type agreement)
 
It's not THAT hard to get credit from a major bank, or a credit card company.

In university, I had friends who had $10-20k in their lines of credit as university students. I know this is a different circumstance (there's policies where you're eligible for ____/yr to do professional degrees) but it's not like they were bringing major money in.

What would it take to get $2000, $3000 in a credit card limit, or a $5000 line of credit? A pulse and a part-time $12/hr job? I don't work in banking - could someone who does shed some light on this?

I don't disagree that payday loan users are often in rough, unprecedented circumstances and might have a use for the money. Maybe they're afraid of banking institutions?
 
^^ Harder than you think. I was with TD for 10 years at the time, had 2 cars and a motorcycle as equity, full time job i've been at for 5 years. thought i would have no problem getting a 5K line of credit. Nope....denied, in fact, the TD CSR didnt even call me back to let me know i've been denied or approved. I waited two weeks before i got fed up and called back to see whats up.

But then again, TD also told me me and my g/f with our finances werent even eligable for 200K mortgage and yet CIBC was approving us for 450K (uuh yea i dont think so) RBC said no problemo to 350K.....
 
I guess that's right, you'd need some equity of some kind first... I'm guessing folks on the margins don't have a house or much of a car (let alone a car) to borrow against.

Still, for most things, just sign up for a credit card and charge it up if you need the $$$? 16.9%/annum insurance compounded daily sucks, but it has to be better than Money Mart.

The need for cash, and cash today, and the willingness to pay horrendous interest for it, makes me think that there's more to this all and makes me wonder where the money's going. Then again, I'm glad that isn't my circumstance and good people make mistakes.

I'm a volunteer tutor in an after-school program, and was helping a student with P/A formulas and comprehension questions on investments and credit cards last week. I'm glad it's being taught in senior year high school. Personally, I was really lucky to get a stern warning about credit cards from my high school math teacher.
 
honduhmatic said:
I guess that's right, you'd need some equity of some kind first... I'm guessing folks on the margins don't have a house or much of a car (let alone a car) to borrow against.

Still, for most things, just sign up for a credit card and charge it up if you need the $$$? 16.9%/annum insurance compounded daily sucks, but it has to be better than Money Mart.

The need for cash, and cash today, and the willingness to pay horrendous interest for it, makes me think that there's more to this all and makes me wonder where the money's going. Then again, I'm glad that isn't my circumstance and good people make mistakes.
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If the client needs the $200 for Beemer gas then he's out of control and deserves what he gets. If the client is an idiot savant that can calculate the time of sunrise twenty years in the future but would pay $50 for a chocolate bar then the interest rate is criminal abuse.

Let's face it, $20 doesn't buy you much today. Dinner for two at Monkey Dungs, a dozen beer, a small bag of groceries? So if you're in a jam and someone bails you out for $20 it doesn't seem all that bad until you calculate the interest or realize that the $20 would pay for the small bag of groceries that one will need by the end of the week. The cycle repeats.
 
Oh for sure, not everyone's a rocket scientist.

Still, at some point, you have to be accountable for your actions.

$20 a week is $1040 a year, which is...

  • More than my annual car insurance;
  • More than my annual motorcycle insurance;
  • About the cable portion of my rogers bill;
  • 3.33% of what a guy earning $30k/year makes BEFORE TAXES (so about 5% after tax?)
Agreed it doesn't seem like much at all but it adds up. I wish folks at the margins could see this and act accordingly.
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