The average interest rate for a payday loan in Utah? 652%.

[Uncle Joe]

Link to tweet

They Loan You Money. Then They Get A Warrant For Your Arrest.

Cecila Avila was finishing a work shift at a Walmart. David Gordon was at church. Darrell Reese was watching his granddaughter at home. Jessica Albritton had pulled into the parking lot at her job, where she packed and shipped bike parts.

(snip)

None of the four, who live in northern Utah and were detained last year, had committed a crime. They had each borrowed money at high interest rates from a local lender called Loans for Less and were sued for owing sums that ranged from $800 to $3,600. When they missed a court date, the company obtained a warrant for their arrest.

(snip)

The presence of 417 payday and title loan stores in Utah — more than the number of McDonald’s, 7-Eleven, Burger King and Subway stores combined — is symptomatic of an age in which financial precariousness is widespread. Across the country, wages have stagnated for decades, failing to keep up with the cost of living. That helps explain why 12 million Americans take out payday loans every year, according to Pew Charitable Trusts. As an often-quoted study by the Federal Reserve Board has noted, a quarter of adults in the U.S. would not be able to handle an unexpected $400 expense without borrowing or selling something to pay for it.

(snip)

Some policymakers have proposed a federal interest rate cap that would effectively ban payday loans. In May, presidential candidate Sen. Bernie Sanders, I-Vt., and Rep. Alexandria Ocasio-Cortez, D-N.Y., introduced the Loan Shark Prevention Act, which would cap interest rates at 15%. Last month, a group of lawmakers introduced the Veterans and Consumers Fair Credit Act, which would extend the 36% interest rate maximum for active-duty service members to everyone. “You have to ask yourself, if it’s immoral to give this type of loan to somebody who is in the military now, how is it OK to give the loan to anybody else?” said Rep. Glenn Grothman, R-Wis., the only Republican sponsor of the bill. Both bills will face substantial difficulty getting through the Senate, according to experts.

(snip)

https://www.propublica.org/article/they-loan-you-money-then-they-get-a-warrant-for-your-arrest

This is a long, tragic read.

[MineralMan]

1. Reminds me of the 6 for 5 lenders when I was in the USAF.

A lot of enlisted guys, especially at overseas bases, would run short near payday. Now, you didn't have to pay for food or lodging if you were in the military, but a guy had other expenses and needs. In my case, the need was the Saturday T-bone steak at the enlisted club at my base in Turkey. It only cost $1, but a couple of beers went well with that steak, which was the best meal to be found on that base. Then, there were cigarettes to buy and so forth.

So, if you ran short of cash just before payday, there was always someone willing to loan you $5 - if you were willing to give them $6 on payday. Or $12 for $10. Those guys did a pretty good business the week before payday, actually. It didn't seem like that big a deal, and the extra buck didn't really matter. There was that T-bone, see...

So, the 6 for 5 guys did pretty well over the long term. And we were just out a buck or two. So...it was a pretty common transaction, really. It was illegal, of course, but nobody complained. They got their steak at the club, after all.

Payday lending is like that, but the amounts are larger and the loans can't be easily paid back on payday, so the interest (vigorish) adds up fast. We always paid the 6 for 5 guys on payday, so we didn't see what the APR on those loans really were.

Now, the 6 for 5 guys are all organized and stuff, but they're still doing business, except that their victims aren't borrowing just to get that T-bone at the club at the end of the month. It's much more insidious than that.

[democratisphere]

2. This kind of payday loan crime should not be allowed to exist anywhere.

I am sick of all of the consumer screwing!

[Uncle Joe]

6. I agree on all acounts democratisphere,

it's always in one form or another.

Having said that, I believe if the media started referring to the American People more as citizens versus consumers, our national mindsets might change for the better.

[JoeOtterbein]

3. K n R ! Thanks for posting!

A great, and sad, read. Bernie is all heart!

[Jose Garcia]

4. What will replace the payday lenders?

There are still going to be people with poor credit who need small short-term loans.

[Uncle Joe]

5. Payday lenders are just one facet of the blood diamond that makes up American society;

which primarily serves to transfer wealth from the poor and middle class to the wealthy.

For starters we need humane-centric and strict usury laws that are actually enforced and definitely aimed at industries that keep too many of our fellow Americans on the hamster wheel.

I'm also of the mind that if we as a society become more universal in our thinking, actions and laws there will far less need for payday lenders because the peoples' economic situation will greatly improve including their credit scores.

A livable wage, Medicare for All, ending medical debt, tuition free college or trade schools, ending school debt, raising the pay of our teachers, investing in pre k and child care, the Green New Deal, quit fighting endless wars, legalizing marijuana, ending the so called war on drugs, treating addiction as a medical issue versus criminal, criminal justice reform, ending cash bail, investing in public housing and our crumbling infrastructure, all of these things to a lesser or greater extent plus more can drastically improve the living standards of the American People wherein they don't have to turn to loan sharks just to get by for another week.