Where is the Taliban when we need them?

Driving by on Brooks street the other day I notice that one of those payday loan places has a new sign that says “need money for gas? stop here!” so I stopped in. I work for a non-profit that serves many needy clients and I wanted to find out just what these places are all about. Many clients have told me that they need assistance from our agency because they fell behind on their payday loans or even worse vehicle title loans. I filled out their paperwork and wrote down 250.00 for the amount of the loan I pretended to need. The contract was handed to me all freshly printed out which showed that for this Payday loan I would pay 65.00 in “fees” (which is the term they use to avoid breaking the law regarding interest rates) This 65.00 fee for a 250.00 loan accrues every two weeks on the date the applicant receives his/her paycheck. I read this contract while glancing around at the other applicants in the small cramped room which once housed a burger and fries establishment. I saw a young woman with a tiny baby in her arms trying to fill out her application. One young man who couldn’t have been more than 22 received his money and skipped out the door with a friend talking about filling his tank, paying rent and going down to shoot some pool. the others stated they were there mostly to get gas money to go to work and to buy some groceries.

One client was a middle-aged woman who seemed to be nearly in tears as she showed the clerk her ID and answered the few questions in a very tired monotone. Not one of these customers even glanced at the contract before signing the papers. I took out my calculator and added up how much a 250.00 loan would cost if all you could ever pay was the fees. There are almost exactly 26 two week periods in one year. 26 times 62.50 equals 1625.00 for the interest charged on 250.00 for one year.

that is a rate of return of 650% on one loan. Most of these people will require many such loans over the course of a year. I looked up a site online that studies these places and the average payday loan place puts out between 750-1000 of these loans per year. At an average of 250.00 per loan they invest annually as much as 250,000.00 per year. The average profit on that investment equals over one and a half million dollars per year. This is an obscene and dispicable business that should be outlawed or at least regulated to provide a more reasonable profit. No wait, I can’t restrain my anger about the predation of the poor that goes on in this country anymore. I think the credit card industry should be more regulated for the predation on the poor that goes on there. Pay day loan proprietors should be marched off to the Afghanistan/Pakistan border by our troops and handed to the Taliban for beheading – and not just an ordinary average sort of beheading either. It should be done with a rusty serrated blade and take hours. Our soldiers would probably love to hand them over in view of what pay day loan/ vehicle title loan places have done to their families until congress stepped in and protected them last year.

* new update There is some new legislation being proposed now in Montana to regulate the payday loan business. the more I look into this outrage the madder I get. it seems that these diabolical slime devils are targeting seniors and the disabled. read

this article in the wall street journal if you really want to see some evil.  

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18 Comments

  1. Industry critics claim that payday lending “costs” American families $4.2 billion in fees. Let’s put it in perspective. In 2006, consumers spent $4.2 billion in ATM service charges to withdraw their own money. They paid an estimated $22 billion in NSF fees to banks and credit unions and banks collected an estimated $10.3 billion for overdraft protection services. Businesses charged an estimated $57 billion in late bill payment fees (more than 140 percent of the total estimated payday lending volume in the U.S.). And credit card interest cost consumers more than $87 billion.

    Payday advances are not only a business, but a service that includes a significant amount of risk. Ask yourself, a stranger approaches you on the street ans asks to borrow $100 for the next two weeks, what do you feel would be fair compensation for lending that stranger, whom you have never met and know nothing about, for that loan?

    The fact is that the pricing structure of for-profit payday lending is reasonable and justified based on the costs to deliver the service. A proof point of this is that the Goodwill, a non-profit, tax-exempt charity is now offering payday loans, charging customers $9.90 per $100 borrowed (252% APR) for their “Good Money” payday loan. And this is only to break even. For-profit payday lenders typically charge an average of $15 per $100 borrowed while also paying taxes, employee salaries and health care, rent and overhead costs.

  2. Imagine my surpise when the black knight himself, defender of the realm of Satan actually deems my tiny poor site worthy of responding to my post. I am flattered indeed and take it as good omen that thy days are numbered indeed. ALlow me to summarize the arguments that you espouse – banks and credit card companies get away with murder. They plunder and feed with impunity on the spoils and the chattel of our poor so why shouldn’t we?
    There used to be a name for your business back when America had a little integrity – they were called pawn shops. Everybody knew what was going on and the pawn brokers were not hypocritical enough to pretend to be anything other than what they were- the last resort of the trully despondent. Your organization represents hypocrites and thieves disguised as businessmen. You prey on the most vulnerable and the most needy of our working poor.
    the same poor that non profit organizations must help when you suck them dry and leave them for dead along the side of your road. Come back Black Knight with a response if you dare,
    the gauntlet is trhown and I await the answer to my dare to debate further.

  3. PS/ Black knight. I clicked on the header to your comment and no page came up.
    dast thou not show thyself or dost thou dwell in darkness?

  4. Many states are taking up arms against these payday lenders, Oregon being one of the leading states to put regulations and maximums upon these predatory “businesses”. It is legalized loan-sharking and many credit unions are offering “Break the Cycle” loans as a way to get out of the ever widening loan-sharking quick sand. Read all about the changes that Oregon has instituted here: http://www.inthesetimes.com/article/2733/
    In response to Oregon’s trail-blazing many other states have begun the process of passing laws to heavily regulate such predatory practises. There is a light at the end of the tunnel…ever so faint yet it does grow stronger…

  5. Anyone who has ever bounced a check, paid a bill late, pawned a personal item knows the fees involved. Same goes for payday lending customers. Members of CFSA are required to display their fees on poster-size displays in all locations. $15 per $100. Period. No additional interest, no hidden fees. The example of using payday loans as an annual loan is irrevelant. It would be like Blockbuster telling you what it costs to rent a movie for a year, when you only want it for a night. Payday loans are TWO-WEEK loans.

  6. anyone who knows anything about this business knows that it is never or rarely a two week loan. All the payday loan places base their profit models on an average of 8 months per client (16 two week periods X 45.00 for an average 300.00 loan = 720.00
    for the use of 300.00) and thanks black knight #2 for entering the fray. all are welcome. you see, bears are capable of doing math.
    one more thing mr. black knight pundit #2, montana allows 25.00 per hundred which would amount to 1200.00 for the same loan as above.
    If anyone would like to post their experiences with payday loan places or Vehicle title loan places please do so. I am anxious to hear everyone’s opinion.

  7. […] commenter problembear wrote a piece detailing his (or her) experience in ‘experiencing’ the payday loan industry. It was good. It illustrated the desperate situation many people are in when they go there and the […]

  8. I am just trying to imagine what circle of Hell one is assigned to if their job involves scouring the web for sites that question Pay Day Loans and then offering a defense of their indefensible practices.

    Wow.

  9. it is a job. somebody has to do it. obviously the two above are not very good at their jobs. their arguments seem spurious, lazy and dashed off.
    I don’t think we are dealing with the sharpest knives in the drawer here.
    Since it is an election year i assume that most of the good lobbyist/spinsurgeons are being sucked up by the desperate lobby for gas and oil , Bush/McCain, and Rumfield’s little gaggle of defence contractors who are about to undergo intense scrutiny for their shenanigans.

  10. […] local bloggers have been covering the issue of “payday lending” and associated businesses in […]

  11. Problembear is such an appropriate name, since you clearly have problems, and you need medication. You advocate beheading with a rusty knife? Having a payday loan in the town is the least of people’s worries in Montana—you are much scarier. Please see a psychiatrist soon.

    YOU WRITE : “Not one of these customers even glanced at the contract before signing the papers. I took out my calculator and added up how much a 250.00 loan would cost if all you could ever pay was the fees. There are almost exactly 26 two week periods in one year. 26 times 62.50 equals 1625.00 for the interest charged on 250.00 for one year.”

    Where is the call for responsibility on the part of the borrower? You’re saying they don’t read what they sign and that makes the lender the bad guy? And 26 weeks? Only an idiot keeps the loan 26 weeks—how is that the lender’s fault?

    Clearly you are on of those liberal wackos that believes in not taking responsibility for your own choices in life. Blame all your problems on everybody else: mom and dad didn’t love you enough, businesses are evil because they make money, government must protect you because you’re too stupid to make your own decisions. They’re all out to get you aren’t they? Poor thing.

  12. if you could actually read I would point to the wall street journal article that i linked to in the above article but since you obviously can’t i won’t waste any time with you. the montana state legislature will take this up in the next session and it will be regulated in 09. that is a done deal. with or without you. fair minded people of all party affiliations are lining up on this one. many of them are outraged conservatives and the last thing they want is to find themselves associated with anyone who would support this heinous diabolical bunch of slime devils. you can quote me on the prediction after the legislature adjourns and our seniors and disabled on social security are protected. I see you have no link to visit so go crawl back under the rock you came from.
    but please feel free to keep commenting. I will put it to good use in showing our supporters just what it means to be mean-spirited.

  13. I know I’m about a month late on this, but, in any case, thank you for this post. While it was horribly depressing to read a real-life account of this predatory industry, it was enlightening.
    Why is our economy in a mess? Has a lot to do with predatory creditors and speculative markets – this is ground zero.

    Thanks. Do you know of anything that is being done in Montana to counter this? Please let me know.

  14. ^ If you know, of course.

  15. nothing official yet, Bob. but i will post as soon as something gets cranked up well before the next legislative session. probably after the elections. Ohio just passed a new law limiting it the same as the military federal law- 36% . lots of support from both demos and repubs on this though, so it should be fun. thanks for the interest. these places degrade our state and create much more disastrous results than ever gets reported simply because everyone who uses them is ashamed to admit it. i would guess that pat day loans/vehicle title loans may account for at least 40% of the most difficult poverty cases in Montana.

  16. […] excellent piece to read is problembear’s Where is the Taliban when we need them?. Problembear has also done up this post <a href = […]

  17. I heard the Devil might be here. Satan, are we still playing cards Tuesday?

  18. the devil is in the details, klemz. game is every wednesday night and he better show up. he owes me big time….


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