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(The New York Times)   Last week the Archbishop of Canterbury went all "moneylenders in the temple" on payday lenders saying he wanted to drive them out of business, Which made it pretty embarassing when it was revealed that the Church of England has invested in one   (nytimes.com) divider line 56
    More: Asinine  
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2874 clicks; posted to Main » on 29 Jul 2013 at 7:43 PM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-07-29 06:43:09 PM  
Doesn't make him wrong.
 
2013-07-29 06:43:42 PM  
Cake or interest trap?
 
2013-07-29 06:57:52 PM  
While I feel that they should be allowed as part of free enterprise and that they do serve a niche market, I feel that they can be evil and are un-Christian. They tend to take advantage of the economically illiterate and downtrodden.

However, I don't fault Welby for this. He certainly has almost no part in the investment of his Church's money, nor should he be expected to know that his church invested 0.0013% of it's portfolio in a group linked to a payday lender.
 
2013-07-29 07:45:11 PM  
Yes, but his solution is to become a money lender, or at least back one by backing a credit union.
 
2013-07-29 07:45:16 PM  
How many people criticizing Detroit have municipal bond funds in their investment portfolio?
 
2013-07-29 07:49:24 PM  
/cue sad trombone
 
2013-07-29 07:50:11 PM  
Oh yeah. The Church of England is still a thing.
 
2013-07-29 07:50:30 PM  

SilentStrider: Doesn't make him wrong.


This. Usury is usury.
 
2013-07-29 07:51:23 PM  
At least short-term money borrowers get something for their money. The same can't be said for a transaction involving the Church of England.

An institution taking advantage of the poor, illiterate masses? I thought the author was referencing the church there for a second.
 
2013-07-29 07:54:39 PM  
Uh... the Archbishop does not directly manage (and I doubt anyone within the church hierarchy does either) the investment portfolio for the Church of England. Even if he did, this is £75,000 out of £5,500,000,000 which is far from the realm of scandal or hypocrisy. Instead, this being revealed, I imagine he will see the money is invested elsewhere because this is  £75,000, not the cornerstone of the investment portfolio for the Church of England.
 
rpm
2013-07-29 08:00:21 PM  

Vangor: Even if he did, this is £75,000 out of £5,500,000,000 which is far from the realm of scandal or hypocrisy.


So how much do you have to support something you claim you don't condone before it becomes hypocrisy? 100,000 GBP? More? Less? Why isn't the dividing point "anything more than 0"?

Scandalous? No, I don't think it is. Hypocritical? Damn straight skippy. It may not be scandalous, but it is point and laugh worthy.
 
2013-07-29 08:01:40 PM  
the reasoning behind getting rid of payday lenders is sound. In principle, they give you cash at a relatively low interest rate provided you pay it back in the alloted time. The problem is the payday lenders have absolutely no requirements to do even the most rudimental credit check on anyone who takes a loan, and actively lend to people who they know won't really be able to pay it back. This little article shows how their interest rates are compounded if you can't pay. It's a very extreme example, but there are lots and lots of people here in the UK who only took small loans and are now in the shiat over not being able them back
 
2013-07-29 08:05:55 PM  
Another cunning plan ruined.
i.imgur.com
 
2013-07-29 08:09:02 PM  
Have you done the numbers? The cost of operating a payday lending shop in this era where there are often two next to each other has brought them to a bubble of saturation. This means most of them don't make much money at the end of the month after paying wages, rent, insurance, losses, and the interest they pay on the money they're middle-manning.

I also wonder how much impact Craigslist and eBay have had on the pawn shops. Circa 96-98 I could walk into pawn shops and find nice, deeply undervalued guitars and other musical gear. I'd take them over to a friend's guitar shop where he'd consign them for me (yes, I flipped guitars). But now there aren't any nice guitars in pawn shops, it's all crap. It looks like the nice guitars are being sold by owner online, even if they're desperate for quick cash.
 
2013-07-29 08:11:15 PM  

rpm: Vangor: Even if he did, this is £75,000 out of £5,500,000,000 which is far from the realm of scandal or hypocrisy.

So how much do you have to support something you claim you don't condone before it becomes hypocrisy? 100,000 GBP? More? Less? Why isn't the dividing point "anything more than 0"?

Scandalous? No, I don't think it is. Hypocritical? Damn straight skippy. It may not be scandalous, but it is point and laugh worthy.


ha ha! The guy at the top isn't monitoring all 80,000 of the organisation's investments as well as doing his actual day job!
 
2013-07-29 08:12:05 PM  
As the archbishop recounted in a magazine interview, when he met the Wonga boss Errol Damelin, he told him "quite bluntly: We are not in the business of trying to legislate you out of existence; we're trying to compete you out of existence."

What a concept, winning the competition by offering a better service rather than calling a whaambulance and demanding the government do what you want because Jesus.
 
2013-07-29 08:12:06 PM  

rpm: So how much do you have to support something you claim you don't condone before it becomes hypocrisy?


Support something? You mean how much money do you have to invest in something. Those are not exactly the same. He is out of the range since this is (unless my math is horribly wrong) less than one percent of one percent. Even in the instance the Archbishop was in direct control of this investment portfolio, this could be dismissed as an oversight. Unless we found much of the remaining  £5,499,925,000 invested is a cover to allow him to have deliberately chosen to invest a paltry sum in the largest payday lender in the United Kingdom... I fail to see hypocrisy; I see a funny coincidence.
 
2013-07-29 08:12:21 PM  

rpm: Vangor: Even if he did, this is £75,000 out of £5,500,000,000 which is far from the realm of scandal or hypocrisy.

So how much do you have to support something you claim you don't condone before it becomes hypocrisy? 100,000 GBP? More? Less? Why isn't the dividing point "anything more than 0"?

Scandalous? No, I don't think it is. Hypocritical? Damn straight skippy. It may not be scandalous, but it is point and laugh worthy.


The thing is, he had no idea, did not take any action to put it there, and had no reason to be involved or to know about it.

These will be funds managed by an instutional investor with no connection to the church other than an account on deposit. The institution would do its duty to a client by maintaining investments base purely on risk-return levels for the portfolio.

And we are talking about one thousandth of one percent. If you get to even one or two percent we can start to talk.

In short I could care if:
1) It was a significant proportion of the portfolio.
2) The Archbishop was involved in the decision making.
3) There was a reason for the Archbishop to know about the investment (such as if it was a large proportion of their portfolio).
 
2013-07-29 08:16:59 PM  
 
rpm
2013-07-29 08:21:31 PM  

opiumpoopy: rpm: Vangor: Even if he did, this is £75,000 out of £5,500,000,000 which is far from the realm of scandal or hypocrisy.

So how much do you have to support something you claim you don't condone before it becomes hypocrisy? 100,000 GBP? More? Less? Why isn't the dividing point "anything more than 0"?

Scandalous? No, I don't think it is. Hypocritical? Damn straight skippy. It may not be scandalous, but it is point and laugh worthy.

ha ha! The guy at the top isn't monitoring all 80,000 of the organisation's investments as well as doing his actual day job!


And how hard is a policy "Don't invest in things we publicly say are unethical". If that policy is not in effect, that's definitely his failing. If it's in effect, he needs to find out why underlings aren't obeying it.

Does he need to know what's being invested in, personally? No. Does he need to make sure that the rules are followed? Damn straight. If he can't trust his underlings to do a job, that's a problem for any business, and he knows that things are going to be under scrutiny.
 
2013-07-29 08:30:41 PM  

rpm: And how hard is a policy "Don't invest in things we publicly say are unethical". If that policy is not in effect, that's definitely his failing. If it's in effect, he needs to find out why underlings aren't obeying it.


Actually, the Archbishop made comment about needing to change the rules for investment in companies which profit from high interest loans. The rules allow for investment in companies which do not primarily profit from things which are considered immoral by them. What you will note is the investment is not in Wonga itself but in what private equity group which has been linked to them; apparently, this group does not make more than 25% from high interest loans.
 
Skr
2013-07-29 08:37:36 PM  
Geh I keep seeing advertisements for 1000-10000 dollar loans that are fast tracked with "no credit needed". In the fine print though they have something asinine like 300%-400% interest. I can't quite understand who would be desperate enough to take something like that and I'm pretty sure some states have made that kind of interest illegal.

I think the Archbishop was in the right on this issue. THe person who point out the relatively small investment could have said " Hey you might not know about this one, you should try to end it" instead of "Ha Gotyouman!"
 
2013-07-29 08:38:47 PM  
by "invested in one" do you actually mean "has a mutual fund"?
 
2013-07-29 08:44:00 PM  

rpm: And how hard is a policy "Don't invest in things we publicly say are unethical".


Hmm. Well, do you own any mutual funds? Is there any business, anywhere, that you regard as unethical?

If you answered yes to both these questions, and you spend less than one week a month poring over the fine print in all the disclosure documents for every fund you're invested in, then it's too hard for  you.
 
2013-07-29 08:45:52 PM  

Triumph: How many people criticizing Detroit have municipal bond funds in their investment portfolio?


Four. Four people.
 
2013-07-29 08:47:42 PM  
"MONEY LENDERS ARE WICKED AND MUST BE DESTROYED!!!"

"But you are investing and making money funding money lenders..."

"YOU'VE GOT TO LIVE IN THE REAL WORLD!!! THIS IS A COMPLICATED ISSUE!!!!!"


Classy, as always.
 
2013-07-29 08:54:03 PM  
I wonder what it would take to set up a P2P financing service for payday loans? Something like LendingClub or Prosper, but with a (potentially) much larger market.
 
2013-07-29 08:55:41 PM  
The church is making a valid statement. Payday loans are a terrible option unless perhaps you have no idea how credit works or have already burned all your bridges. The US Indian loans are as bad or even worse. Want 10k? just sign this and pay over 150% APR! Piece of cake!

Of course the root of the whole issue is area combination of lack of education about financial products and lack of available income.. honestly some classes on that instead of Sunday school would be a much better use of kid's time at church. Removing one terrible option will just lead people to another.. title loans, loan-sharks, payday lenders. Swap one for another?

Some states in the US have shut these down by limiting fees or rates. Honestly as long as they're clearly disclosed I don't see a major issue with it. Same with smoking and most drugs. Stupid decisions are available in almost every aspect of life.
 
2013-07-29 09:01:27 PM  

Erder: The church is making a valid statement. Payday loans are a terrible option unless perhaps you have no idea how credit works or have already burned all your bridges. The US Indian loans are as bad or even worse. Want 10k? just sign this and pay over 150% APR! Piece of cake!

Of course the root of the whole issue is area combination of lack of education about financial products and lack of available income.. honestly some classes on that instead of Sunday school would be a much better use of kid's time at church. Removing one terrible option will just lead people to another.. title loans, loan-sharks, payday lenders. Swap one for another?

Some states in the US have shut these down by limiting fees or rates. Honestly as long as they're clearly disclosed I don't see a major issue with it. Same with smoking and most drugs. Stupid decisions are available in almost every aspect of life.


Or something came up and you need money RIGHT NOW.  I screwed up and transferred $3,000 to a credit card instead of $1,000.  That $2000 was needed right or I'm bouncing stuff right and left.  I went to a payday place (Dollar Loan Center in LV if you must know) and I had $2000 in about 10 minutes based on having a pulse and having not burned them before.  I managed to undo most of my disaster in about a week and paid some oddball amount like 76.32 in interest.  It beat the hell out of 6 or 7 overdraft fees, as many late payment fees, raised interest across the board, etc.
CSB, sounds like a commercial, but these places do serve a purpose and take enormous risks and thus charge for their risk accordingly.

The terms are always spelled out and explained clearly and I've never seen or heard of a person dragged into a payday loan place and forced to take out a loan.
 
2013-07-29 09:06:00 PM  
"Radix malorum est cupiditas."

- The Canterbury Tales
 
2013-07-29 09:06:15 PM  

sloughtown4ever: the reasoning behind getting rid of payday lenders is sound. In principle, they give you cash at a relatively low interest rate provided you pay it back in the alloted time. The problem is the payday lenders have absolutely no requirements to do even the most rudimental credit check on anyone who takes a loan, and actively lend to people who they know won't really be able to pay it back. This little article shows how their interest rates are compounded if you can't pay. It's a very extreme example, but there are lots and lots of people here in the UK who only took small loans and are now in the shiat over not being able them back


Here's the thing.

1) A moderate interest rate over a LONG period of time is a lot worse than a huge interest rate over next week.

My car loan is at 4%, and at 4%, I'm going to hand them $4,000 extra dollars over the next 5 years.
My student loans are at ~5%, and under the original terms, they would have had me paying back an extra $7,000 over the next 10 years.
A mortgage can easily double the price of a house, especially once you add in mortgage insurance and property taxes.

So hearing "I need $500 to make rent, I'll pay you back $550 after the next paycheck" isn't exactly evil.  This loan cost you $50.  The mortgage cost you a million dollars (Yay, SF Bay real estate prices).  Sure, the functional interest rate is usury, and it's really easy to get back into trouble especially if you're doing this month after month after month (though honestly, at that point, it's time to find a better job or a cheaper apartment or start looking for roommates (and if for some reason, you can't do any of those things start screaming for help from family or the government)), but the concept isn't exactly evil.

2) The payday lenders are filling a niche.

If these people were actually creditworthy, they'd get a loan.  If people could trust them to actually pay the money back when they were supposed to, they wouldn't be going to Western Sky, they'd be going to their local bank.  If the payday lenders go away, we'll get loan sharks again.  I don't like 2000% interest.  I really don't like 2000% interest coupled with "Miss a payment and we break your legs and kidnap your children".  If given a choice between those two, I will happily embrace the first.

/Personally, I just use my credit card.  My first paycheck is more or less gone the second it shows up in my account while the second paycheck buys all my day-to-day expenses and optional debt payoffs, so I just let it sit, use my credit card until the 15th, and then switch over to the debit card.  If I can't pay everything back this month, worst case I'm out $8 in interest ($750 limit).  And in the meantime, I'm racking up a fantastic credit history.
 
2013-07-29 09:07:33 PM  

The Pope of Manwich Village: "Radix malorum est cupiditas."

- The Canterbury Tales


I also say "WimbleTON."
 
2013-07-29 09:18:07 PM  

Skr: Geh I keep seeing advertisements for 1000-10000 dollar loans that are fast tracked with "no credit needed". In the fine print though they have something asinine like 300%-400% interest. I can't quite understand who would be desperate enough to take something like that and I'm pretty sure some states have made that kind of interest illegal.

I think the Archbishop was in the right on this issue. THe person who point out the relatively small investment could have said " Hey you might not know about this one, you should try to end it" instead of "Ha Gotyouman!"


All states USED to consider this illegal, the crime was Usury, or more colloquially loan sharking.   Then' in 1978 the US Supreme court ruled that in a interstate contract dispute over a loan, the laws of the state of the lender governed not the state of the person receiving the money.

This set off a "race to the bottom"   by several states, starting with South Dakota, to see how quickly they could  jettison consumer protections from their lending law in order to convince credit card companies to relocate their HQs there.  Usury laws and lending limits were the first casualties
 
2013-07-29 09:20:26 PM  

rpm: So how much do you have to support something you claim you don't condone before it becomes hypocrisy? 100,000 GBP? More? Less? Why isn't the dividing point "anything more than 0"?


I'm sure if I looked very closely at where my money is invested, I'd probably find some things that I don't want to support. The thing is, I invest in things that are managed by others and they invest in a lot of things.  All I care about is the return.  I don't think that makes me evil  Maybe a church should be more careful about where their money goes.

sloughtown4ever: the reasoning behind getting rid of payday lenders is sound. In principle, they give you cash at a relatively low interest rate provided you pay it back in the alloted time. The problem is the payday lenders have absolutely no requirements to do even the most rudimental credit check on anyone who takes a loan, and actively lend to people who they know won't really be able to pay it back. This little article shows how their interest rates are compounded if you can't pay. It's a very extreme example, but there are lots and lots of people here in the UK who only took small loans and are now in the shiat over not being able them back


Every news story I've seen about payday lenders tells me the only difference between them and the mafia is that they won't send someone out to break your legs if you can't or don't repay them.  I've seen stories about them locally and internationally.  There was talk of regulating them in my state a year or 2 ago.  I don't know if anything ever came of that, but I've also seen stories on BBC about the payday lenders in merry olde England.

The only thing I can say is don't use them.  It never turns out well.  Oh, and don't be poor either.  That usually doesn't work out well either.

The thing is, some businesses only exist to screw people over.  I had my own experience with one just the other day - an AC repair company.  They sent a sales representative out instead of a technician.  It didn't take him long to get into full sales pitch mode.  He could sell me a basic system for $3500, but that only had a 1-year warranty.  What I really needed to do was spend at least $5000, but that wasn't compatible with my furnace so I'd have to spend between $3000-$6000 to replace that too, but not to worry, he'd knock $1000 off the price if I didn't get their cheap-o $3500 AC and they offered financing and he'd throw in a humidifier too.  He wouldn't even give me a copy of his price list which only had 2 brands to choose from.

I told him I'd think about it and went to Wal-Mart and bought a fan for $25.  Then I called another AC company.  I didn't tell him someone else had already looked at the system.  As he was looking at it, he said "Well, you don't need new equipment."  Yeah, he said that totally unprompted by me.  He topped off the coolant and charged me what seemed like a reasonable price.  ($55 a pound for R22 as opposed to $95 a pound that the first company wanted to charge).

So basically, I paid $75 for a salesman to come out to my house on Friday and try to fark me up the ass.  That should be criminal, but I'm sure if I tried to pursue it further I wouldn't have a leg to stand on because that's probably his professional opinion and even if he's wrong he's probably entitled to it.
 
2013-07-29 09:22:16 PM  
Because if they shut down high-interest loan businesses, poor people with bad credit will be able to get low-interest loans.
 
2013-07-29 09:26:17 PM  

pedrop357: Erder: The church is making a valid statement. Payday loans are a terrible option unless perhaps you have no idea how credit works or have already burned all your bridges. The US Indian loans are as bad or even worse. Want 10k? just sign this and pay over 150% APR! Piece of cake!

Of course the root of the whole issue is area combination of lack of education about financial products and lack of available income.. honestly some classes on that instead of Sunday school would be a much better use of kid's time at church. Removing one terrible option will just lead people to another.. title loans, loan-sharks, payday lenders. Swap one for another?

Some states in the US have shut these down by limiting fees or rates. Honestly as long as they're clearly disclosed I don't see a major issue with it. Same with smoking and most drugs. Stupid decisions are available in almost every aspect of life.

Or something came up and you need money RIGHT NOW.  I screwed up and transferred $3,000 to a credit card instead of $1,000.  That $2000 was needed right or I'm bouncing stuff right and left.  I went to a payday place (Dollar Loan Center in LV if you must know) and I had $2000 in about 10 minutes based on having a pulse and having not burned them before.  I managed to undo most of my disaster in about a week and paid some oddball amount like 76.32 in interest.  It beat the hell out of 6 or 7 overdraft fees, as many late payment fees, raised interest across the board, etc.
CSB, sounds like a commercial, but these places do serve a purpose and take enormous risks and thus charge for their risk accordingly.

The terms are always spelled out and explained clearly and I've never seen or heard of a person dragged into a payday loan place and forced to take out a loan.



I used to be a manager at Dollar Loan Center, their rates are very fair compared to payday loan stores because they are a signature loan, and they actually run a transunion report on you, so their decision is partially based on credit. They also only charge by the day, so you can get a loan for 1 day if you need it. If I was ever in a bind and needed quick cash, I would go to them in a heartbeat as long as I knew I could pay the, back in a timely manner.
 
2013-07-29 09:32:27 PM  
"His aim, the cleric said, was quite literally to drive the company out of business by throwing the church's support behind small-loan institutions like credit unions with much lower interest rates."

How out of touch can someone be? A person who uses payday loans wouldn't be able to get a business card from a credit union, much less a loan.
 
2013-07-29 09:34:54 PM  

ArkAngel: While I feel that they should be allowed as part of free enterprise and that they do serve a niche market, I feel that they can be evil and are un-Christian. They tend to take advantage of the economically illiterate and downtrodden.


The bible forbids charging interest on loans and selling food for profit.
 
2013-07-29 09:48:00 PM  

Magorn: Skr: Geh I keep seeing advertisements for 1000-10000 dollar loans that are fast tracked with "no credit needed". In the fine print though they have something asinine like 300%-400% interest. I can't quite understand who would be desperate enough to take something like that and I'm pretty sure some states have made that kind of interest illegal.

I think the Archbishop was in the right on this issue. THe person who point out the relatively small investment could have said " Hey you might not know about this one, you should try to end it" instead of "Ha Gotyouman!"

All states USED to consider this illegal, the crime was Usury, or more colloquially loan sharking.   Then' in 1978 the US Supreme court ruled that in a interstate contract dispute over a loan, the laws of the state of the lender governed not the state of the person receiving the money.

This set off a "race to the bottom"   by several states, starting with South Dakota, to see how quickly they could  jettison consumer protections from their lending law in order to convince credit card companies to relocate their HQs there.  Usury laws and lending limits were the first casualties


There is a reason every credit card company has a headquarters in Nevada and/or Delaware. Same reason. Usury is legal there.

/Virginia outlawed these payday loan places, but not for the right reason. Capital One is stationed in McLean, Virginia and CEO Richard Fairbank is a generous contributor to our politicians.
 
rpm
2013-07-29 09:52:46 PM  

gfid: I'm sure if I looked very closely at where my money is invested, I'd probably find some things that I don't want to support. The thing is, I invest in things that are managed by others and they invest in a lot of things.  All I care about is the return.  I don't think that makes me evil  Maybe a church should be more careful about where their money goes.


Yeah, anyone that claims to be the source and arbiter of morality really, really need to keep everything squeaky clean. An arbitrary person investing in something like this is a "meh, whatever", but if you want to butt into people's business, yours is fair game.
 
2013-07-29 09:54:58 PM  
If you hate what certain businesses do to make their money, there is this organization that you can invest in if you really want to put your money where your mouth is...

http://www.ethicalfunds.com/Pages/Home.aspx

If course, with the way financial instruments get chopped up and re-formed over and over again by the so-called wizards or Wall St, I take the "ethical" part with a rather large grain of salt.
 
2013-07-29 10:37:43 PM  
5.5 billion. How much of that came by skimming off the meager earnings of the poor?
 
2013-07-29 10:49:21 PM  
I have a real hard time believing a church would be part of shady financing

farm3.staticflickr.com
 
2013-07-29 10:56:47 PM  
Usury is bad again? Better get a real job, Jews.
 
2013-07-29 11:16:40 PM  

meyerkev: Here's the thing.

1) A moderate interest rate over a LONG period of time is a lot worse than a huge interest rate over next week.

My car loan is at 4%, and at 4%, I'm going to hand them $4,000 extra dollars over the next 5 years.
My student loans are at ~5%, and under the original terms, they would have had me paying back an extra $7,000 over the next 10 years.
A mortgage can easily double the price of a house, especially once you add in mortgage insurance and property taxes.


Yeah, shenanigans. Here's the actual thing. A moderate interest rate over a long period of time costs more money in absolute terms than a high-interest short-term loan. But in practice, paying double your home's worth at mortgage rates is vastly better, and paying "just" $50 to hold $500 for a week is vastly worse. The APR is the only meaningful measure of betterness or worseness.

Switch the terms around if you don't believe me. At the mortgage rates that double the price of a house over 30 years (~5.25%), you'd pay about $0.50 for that $500, and at payday loan rates, you'd pay over $3,000,000 for a 30-year, 116% mortgage on a $100,000 house. Which is "better" now? The lower rate is always better, regardless of what size or length of loan it's being applied to.

If I loaned you a dollar today and asked for ten when you paid me back tomorrow, my zillion% APR would be "better" in that it only cost you 9 "extra" dollars, compared to $50 at that payday loan place. That's $41 "better!" But it would still be the worst loan you ever took out.

(Also, what do property taxes have to do with this?)
 
2013-07-29 11:55:51 PM  

semiotix: The APR is the only meaningful measure of betterness or worseness.


So, your going to discount accessibility as a factor even in the cases where a payday loan is the only loan accessible to someone?

Really, does it matter that there is a near infinite amount of better options availiable to other people?
 
2013-07-29 11:59:13 PM  
Holy carp! The Pope is all "poverty and simplicity" and Pat Robertson seems to recognize that transexuals are not innately sinful for wanting to be a different sex, and now the C of E is speaking up against obscenely exploitative usury.

Something's up. Something big is up.

SECOND COMING ALERT! SECOND COMING ALERT! THIS IS NOT A TEST. ALL GODLESS HEATHENS TO BATTLE STATIONS! WE'VE GOT INCOMING!
 
2013-07-30 12:35:56 AM  

zzrhardy: semiotix: The APR is the only meaningful measure of betterness or worseness.

So, your going to discount accessibility as a factor even in the cases where a payday loan is the only loan accessible to someone?


Uh... no. I was going to say that if you're going to compare two loans, like that guy was doing, it doesn't make sense to judge them according to how much you have to pay back in absolute terms.  Actually, not only was I going to say that, I did say that.

But since you mention accessibility, the fact that the working poor (by definition the clientele of a payday loan place) only have one fantastically shiatty option available to them when they need small amounts of short-term credit to get from one day to the next is exactly the problem. From a public policy standpoint, regulating and restricting them makes a lot of sense, as does backing less predatory alternatives (like the Archbishop apparently wants to do).

There is a point where even if you don't "discount" accessibility, it just gets outweighed by the turdliness of the accessible product. If it's not at 100% or 200% or 400% APR, it can't be far from there, either.
 
2013-07-30 01:15:07 AM  
What a scam.
They collect money from you in church and then they loan it to you at high interest rates.

With friends like those, who needs enemies.
 
2013-07-30 01:48:57 AM  

semiotix: meyerkev: Here's the thing.

1) A moderate interest rate over a LONG period of time is a lot worse than a huge interest rate over next week.

My car loan is at 4%, and at 4%, I'm going to hand them $4,000 extra dollars over the next 5 years.
My student loans are at ~5%, and under the original terms, they would have had me paying back an extra $7,000 over the next 10 years.
A mortgage can easily double the price of a house, especially once you add in mortgage insurance and property taxes.

Yeah, shenanigans. Here's the actual thing. A moderate interest rate over a long period of time costs more money in absolute terms than a high-interest short-term loan. But in practice, paying double your home's worth at mortgage rates is vastly better, and paying "just" $50 to hold $500 for a week is vastly worse. The APR is the only meaningful measure of betterness or worseness.

Switch the terms around if you don't believe me. At the mortgage rates that double the price of a house over 30 years (~5.25%), you'd pay about $0.50 for that $500, and at payday loan rates, you'd pay over $3,000,000 for a 30-year, 116% mortgage on a $100,000 house. Which is "better" now? The lower rate is always better, regardless of what size or length of loan it's being applied to.

If I loaned you a dollar today and asked for ten when you paid me back tomorrow, my zillion% APR would be "better" in that it only cost you 9 "extra" dollars, compared to $50 at that payday loan place. That's $41 "better!" But it would still be the worst loan you ever took out.

(Also, what do property taxes have to do with this?)

Assessing a payday loan solely on APR is like assessing an airport hotel based on how much it would cost to live there all year round.
 
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