Payday Loans - Loan Sharks or Life Saver?

Published on January 26, 2007 By Dr Guy In Current Events

A few years ago, I noticed all these shops popping up. They were advertising short term loans for the cash strapped. Up to $500! For that short term loan to tide you over to payday. I did not think much of them, nor did I ever try to avail myself of them. I knew the catch without going in to check on it. They would charge a fee for a loan of a week or so. And annualized, that fee was worse than a cash advance on a credit card. How else could they do business?

But I figured that perhaps there were some fish out there that would swallow the spiel and take advantage of them. But since they were up front about the charges, I saw no problem. You make your own decisions.

The annualized interest rates turned out to be about 360+% or some such ungodly number. Ok, So? It is short term, and not mandatory.

But then our over protective legislature decided that "This MUST stop!". Because the rates were akin to loan sharking. Even though they opened the door for the loans to be legal. Until they went back to remedial math and figured out the annualized percentage rate.

I am sure there are many states that do not allow these type of loans. Pappa government must protect their little chicks. But I am curious. Does anyone think they are a bad idea? This is not a long term loan, but they company needs to make some money or they cannot stay in business (remember the joke about the Rolls Royce owner getting a $5k loan and using his car for collateral in ManHattan - and then paying it off in 30 days and the interest all $15 of it? Parking in Manhattan for 30 days for $15 dollars!).

Personally, while I have never done a cash advance on a credit card (due to the up front 2% fee plus macaroni and cheese is not a bad dinner), I would have had I ever been in those straights. But for others (as my wife is a paralegal in bankruptcy), I do understand that some just cant manage money to save a penny. So why not let them avail themselves of this service.

Or not. I guess I cant see why Papa Government would even care. And by deciding it is bad, they are basically going to shaft the poor (when was the last time a middle or upper income person needed a short term $500 loan?). The poor cannot go to a bank for a loan. So they have 2 choices. Payday, or Guido.

If I was there, I would chose Payday.

Comments (Page 2)

SanChonino

on Jan 26, 2007

any one object to Blue Hippo? I mean when was the last time anyone paid $1560 for a starter computer?

I've seen those advertisements many times on TV and wondered what kind of exorbitant price they would be charging for those suckers. Wow. And these are POS computers that are still running Celeron processors and the like. And a price like that?

Instant gratification. That's the problem with my generation. Everything needs to be completely accessible and available at your fingertips.

bakerstreet

on Jan 26, 2007

I consider them the lowest form of scum, sharing positions with child molesters and old-lady rapists. I've worked in the 'we-serve-the-projects' credit business, and I rank the people who own these places around the same level as Osama bin Laden. I don't advocate violence against them, but if every one of them burst into flames at once I wouldn't shed a tear.

As a matter of fact I'd probably have to stifle a giggle. I think if our nation really had any values we wouldn't even ponder the government closing those places. The community would just tar and feather the usurers and ride them out of town on a rail. I wouldn't waste my spit on them.

Gideon MacLeish

on Jan 26, 2007

On a side note, any one object to Blue Hippo? I mean when was the last time anyone paid $1560 for a starter computer? Yet they are a thriving business (a friend actually worked for them for a while). It is the same thing. Like Rent-a-Center and such. People who want it all before they can afford it.

Again, there's a way to defeat industries like this, if people want to. I've done the math, and I can put together a pretty decent starter computer system, complete with Windows XP Home and a monitor for a $480 baseline price, which I could make cheaper if they wanted me to install old drives or another OS (the O/S is $90 of that price tag alone). That's about 3-4 months of payments to Rent-a-Center, but it means you have to WAIT 3-4 months to get it. Nobody wants to do that, it seems.

Gideon MacLeish

on Jan 26, 2007

As a matter of fact I'd probably have to stifle a giggle. I think if our nation really had any values we wouldn't even ponder the government closing those places. The community would just tar and feather the usurers and ride them out of town on a rail. I wouldn't waste my spit on them.

The sad thing is, the people that those who live in these communities consider to be "leaders" are not only not condemning these places, they are, at least in one case (Sharpton) PIMPING these places.

If Jesse Jackson cared about the projects, he'd put up businesses there and establish loan centers with more favorable rates. That would do FAR more for the poor than his extortionist practices currently do.

Dr Guy

on Jan 26, 2007

for a $480 baseline price

Dell does it cheaper. The point is, that so many do not know the value of "$500" versus $30/week!

And that is sad. They want it NOW. Not in a few months.

(due to my hot water heater - not installed by me - setting me back a bundle - when it went south - I am going to be late in building my Vista PC. WHy? Because i refuse to go into debt. Experience? Wisdom? Or growing up poor? Lately, I think the latter. Unfortunately not too many these days understand that)

Gideon MacLeish

on Jan 26, 2007

Dell does it cheaper

Not exactly. Their baseline computer ($359) does not include a monitor or free shipping (except during promotional times). You also do not get your disks (See my article "I Have Met the Devil, and His Name is Sony" for reasons that might be important down the road) unless you pay extra for them. The main advantage you get from Dell is that you can usually talk them into some software perks. But I can load the computer I mentioned with a whole host of freeware goodies that Dell would not even consider adding, including a complete office suite (OpenOffice). And I am MUCH cooler than some guy named "Steve" in Bangladesh.

Gideon MacLeish

on Jan 26, 2007

Yeah, washing machine's gonna do the same to us. But I should get my case mod going within the next couple months.

Dr Guy

on Jan 26, 2007

You also do not get your disks (See my article "I Have Met the Devil, and His Name is Sony" for reasons that might be important down the road) unless you pay extra for them.

You can mint your own. And I can get you one for $400 with a monitor. And I do HIGHLY recommend once getting it you mint your own!

I use to do computers cheaper like you. But Dell just made me a technician, and not an OEM.

Dr Guy

on Jan 26, 2007

Yeah, washing machine's gonna do the same to us

Damn utilities!

Gideon MacLeish

on Jan 26, 2007

I use to do computers cheaper like you. But Dell just made me a technician, and not an OEM.

I don't actually "do" computers, I'm just saying it's possible. I'll build one if requested. And I could cut prices further if I wanted to push it, what I listed was my baseline. Dell isn't my competition; oddly enough, WalMart is. For some inexplicable reason, the uninitiated think that if WalMart carries it, it MUST be good.

The truth is, I can put together a better software suite than these manufacturers provide (not naming my sources...it's a trade secret). Most end users aren't going to know how to talk Dell into software deals, or how to burn their recovery disks, or how to find quality software for free or very low cost without downloading a whole smorgasboard of viruses to go with. And, as you know, a low end Dell is not any better quality than a low end eMachines. The main difference is the service and support.

bakerstreet

on Jan 26, 2007

In my experience the money isn't really there to be made on cut-rate systems. I have a hard time believing anyone can do it by hand cheaper than Dell. The money I have made has come from people who want quality and are willing to pay for it.

On higher-end systems Dell STILL has to make their prices competitive. They just save money on the parts that people don't ask about. People that hire me to build systems for them want the whole thing to be good, and not just a system with a few gems and the rest as cheap as possible. That, and they know that what I build will be sitting there running 5 years later, and if it isn't, they know I'll answer their call.

Dr Guy

on Jan 26, 2007

a low end Dell is not any better quality than a low end eMachines

Gack! Bite your tongue! eMachines are crap!

Dell isn't my competition; oddly enough, WalMart is. For some inexplicable reason, the uninitiated think that if WalMart carries it, it MUST be good.

Yea, until you get to the warranty. My hourly rate means that a machine out of warranty is going to cost you as much as you paid for the machine. I like the Dell warranty,

But to each his own.

Just do not mention eMachines here again! I will hex you! (does it show I hate them? )

Dr Guy

on Jan 26, 2007

Reply By: BakerStreet

Baker, in the spirit of brevity, I just quoted your name. But in the cut throat game of computers, I ditto your comment. Yes that is the game! And my philosophy as well.

Now, do you have any spare parts for me? Given my utilities problems?

Gideon MacLeish

on Jan 26, 2007

Yea, until you get to the warranty. My hourly rate means that a machine out of warranty is going to cost you as much as you paid for the machine. I like the Dell warranty,

Yeah, that's why I usually recommend Dell to anyone who asks about low end computers: their service and support rocks, and they offer good warranties.

Like Baker said, though, there's quality to consider. There are parts I just won't put in a machine that I would build, and that makes my baseline price a bit higher.

Dr Guy

on Jan 26, 2007

Like Baker said, though, there's quality to consider. There are parts I just won't put in a machine that I would build, and that makes my baseline price a bit higher.

Same here! For me it is a build. For the desk jockey, that wants to write documents and read email - Dell.

Welcome Guest! Please take the time to register with us.
There are many great features available to you once you register, including:

Richer content, access to many features that are disabled for guests like commenting on the forums.
Access to a great community, with a massive database of many, many areas of interest.
Access to contests & subscription offers like exclusive emails.
It's simple, and FREE!