I knew there was a reason I saw an explosion of these businesses over the last couple

evince

evince

Truthmatters
http://www.chicagotribune.com/business/chi-mon-payday-borrowers-may12,0,2759814.story

A 2005 law changed the regulations of these types of loans.



Kirk Donald was stuck in financial quicksand and sinking fast.

He hustled harder on his daytime sales job, worked night security at a nursing home and delivered papers at dawn. He emptied his family's insurance policies and retirement savings, borrowed from family and friends, and went short of food.

Why? To keep up with $2,000 in loans he had taken out without realizing that the 701 percent annual interest rate meant he would have to repay $5,848 in 4 1/2 months.

Consumer advocates are trying to protect borrowers like Donald, waging a tug-of-war with the loan industry in the Illinois legislature in an effort to close a loophole in the 2005 payday loan reform law.

The 2005 law capped rates on one type of loan: short-term "payday" loans taken out for up to 120 days are limited to 403 percent annual interest. The law also imposed protections aimed at keeping borrowers from falling into debt traps, such as limiting the number of loans to two and allowing borrowers to work out a repayment plan.

Soon after the law took effect, however, many lenders began directing borrowers to loans of 121 days or longer that did not include such safeguards, consumer advocates say. State officials acknowledge they have received complaints from consumers who claim they were shifted to the costlier loans.
 
Desh said:
http://www.chicagotribune.com/business/chi-mon-payday-borrowers-may12,0,2759814.story

A 2005 law changed the regulations of these types of loans.



Kirk Donald was stuck in financial quicksand and sinking fast.

He hustled harder on his daytime sales job, worked night security at a nursing home and delivered papers at dawn. He emptied his family's insurance policies and retirement savings, borrowed from family and friends, and went short of food.

Why? To keep up with $2,000 in loans he had taken out without realizing that the 701 percent annual interest rate meant he would have to repay $5,848 in 4 1/2 months.

Consumer advocates are trying to protect borrowers like Donald, waging a tug-of-war with the loan industry in the Illinois legislature in an effort to close a loophole in the 2005 payday loan reform law.

The 2005 law capped rates on one type of loan: short-term "payday" loans taken out for up to 120 days are limited to 403 percent annual interest. The law also imposed protections aimed at keeping borrowers from falling into debt traps, such as limiting the number of loans to two and allowing borrowers to work out a repayment plan.

Soon after the law took effect, however, many lenders began directing borrowers to loans of 121 days or longer that did not include such safeguards, consumer advocates say. State officials acknowledge they have received complaints from consumers who claim they were shifted to the costlier loans.
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The fact that they are "limited" to a 403% annual interest rate is sickening. I think this is the same type (but worse) of crap the credit card industry gets away with... they find one excuse after another to raise peoples rates. Tease people with low up front rates, but then drill them. My sister (relatively fresh from college) took out debt on her credit cards and now gets the priveledge of paying 30% per year.

This and your payday example are pure debt traps. People who borrow from these sources (knowing they cannot pay back the amounts quickly) soon become trapped into constant payments just to keep up with these insane interest rates.
 
Desh said:
http://www.chicagotribune.com/business/chi-mon-payday-borrowers-may12,0,2759814.story

A 2005 law changed the regulations of these types of loans.



Kirk Donald was stuck in financial quicksand and sinking fast.

He hustled harder on his daytime sales job, worked night security at a nursing home and delivered papers at dawn. He emptied his family's insurance policies and retirement savings, borrowed from family and friends, and went short of food.

Why? To keep up with $2,000 in loans he had taken out without realizing that the 701 percent annual interest rate meant he would have to repay $5,848 in 4 1/2 months.

Consumer advocates are trying to protect borrowers like Donald, waging a tug-of-war with the loan industry in the Illinois legislature in an effort to close a loophole in the 2005 payday loan reform law.

The 2005 law capped rates on one type of loan: short-term "payday" loans taken out for up to 120 days are limited to 403 percent annual interest. The law also imposed protections aimed at keeping borrowers from falling into debt traps, such as limiting the number of loans to two and allowing borrowers to work out a repayment plan.

Soon after the law took effect, however, many lenders began directing borrowers to loans of 121 days or longer that did not include such safeguards, consumer advocates say. State officials acknowledge they have received complaints from consumers who claim they were shifted to the costlier loans.
Click to expand...

Side note... intersting that it is a heavy DEM state that is the one with the worst situation.
 
It really does apear a certain segment of our gov seemed to promote every possible way to rape the little guy who was struggling. Bankruptcy laws stiffened, loan deregulations of all kinds and fighting at every corner to keep the states from protecting the little guy.

Somebody thought we needed more working poor in this nation.
 
Desh said:
It really does apear a certain segment of our gov seemed to promote every possible way to rape the little guy who was struggling. Bankruptcy laws stiffened, loan deregulations of all kinds and fighting at every corner to keep the states from protecting the little guy.

Somebody thought we needed more working poor in this nation.
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Again, I agree. Now... no more rational posts from you today... we are agreeing way to frequently.

Did you hear about the conspiracy where....
 
Desh said:
Not sure what you mean SP. Its pretty much what Ive been saying for years now.
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Yes, and I tend to agree with you on these particular issues. But you are bringing forth the issues we agree upon in abundance today. You need to space them out... you know... mix in an ultra right wing conspiracy here or there.
 
701%?

The question I would like to ask the libertarians who will surely pop up in their defense is, who would take out a loan fully well and clearly knowing that it had a 701% interest rate?

Anyone?

It seems a tad bit like a scam to me. I don't know, it just sets my "scam alarm" off personally.
 
Yeap there are many complaints that the businesses are tagging a day on the loan agreement without the signers approval which makes it an unregulated loan. One day is all it takes.
 
Watermark said:
701%?

The question I would like to ask the libertarians who will surely pop up in their defense is, who would take out a loan fully well and clearly knowing that it had a 701% interest rate?

Anyone?
Click to expand...


A man who had to pay $2000 in 24 hours or lose his life, maybe.

But seriously, this is an area where a degree of regulation would be appropriate.
 
The rates considered acceptable today would have made a loan shark blanch when I was a kid. It is ridiculous what these companies are getting away with. This is definitely one area where regulation is needed, and needed badly. Credit card companies are little better and need better regulation also.

That being said I happened to agree with the tightening of bankruptcy regulations. Those, too, had become too lax. Too many people were taking out loans KNOWING they could not pay them back, and relying on bankruptcy after soaking their credit for items they knew they could not afford. But the new bankruptcy regs should have been coupled with better regs on predatory loan practices.
 
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