Check Cashers, lenders, builders and lenders

[Science Abuse]

this rant is spawned by something I heard on the ol radio today, an MI Homes ad:

"Despeite what you may have heard, interest rates are still at all time lows..."

Yeah that old Alan Greenspan dude doesn't know what the fuck he's talking about.

 

Is anyone else out there disturbed and slightly worried by the amount of companies making it easy for people to get into catastrophic debt?

-Check Cashers. You get a cash advance tht you need to pay off the next week. After you pay it off, You're left with less then before, and therefore need another advance just to get by. It begines a visious cycle that results in the individual being in debt by weeks and weeks of pay, plus intrest.

-"Smart loan" programs. It is not smart becuse people don't realize WHY the monthly payments are lower and WHY they will die before ever owning a stick of lumber in their house.

-Intrest Only Payments. This is the worst I've seen and should be illegal. Never paying anything toward the principle is the worst idea in the history of money, and theirs people dumb enough to do it.

-Easy loan places. "got bad credit? got no credit? bankrupcy? divorce? felony convictions?"...THEN YOU DONT NEED A LOAN! Lending money to people who obviously cant afford it.

 

Normaly I'm all about the stupid people of the world feeling the worth of their mistakes, and dont generaly care about those who prey on idiocy.

BUT this is leading us headlong into another depression, because, as it turns out, America is 80% stupid people. A quarter billion people filing bankrupcy WILL effect you no matter how financily secure you are.

 

Thoughts? Clay, I'm looking forwrd to your input, you're knee deep in most hings fiscal.

 

[ 14. October 2004, 12:51 AM: Message edited by: BrockSamson ]

[Buck531]

Make your sig pic smaller.

 

My .02.

 

btw, I agree 100% on what you said.

[Orion]

can i get an "amen!"?

[Guest powers]

Oh my where do i start. If you seem to think that mortgage rates have anything to do with the federal lending rate or prime which is what Greenspan talks about then you are sorely confused. Mortgage rates are at an crazy all time low.

 

-check cashers- I would rather pay 45 dollars for a 2 week 500 dollar loan than pay 2 bills late that will charge me 25 dollars each AND report to my credit costing me WAY more in interest later.

 

-smart loan from MI- They are only for "smart people" and are usually only available to better credit borrowers. And the program is a very good program. The fault is with a) people who agree to loans they don't fully understand and b) loan officers who lie and or fail to explain them in an understandable fashion. Which i have worked with people who sold loans which they themselves didn't understand.

 

-interest only- This is a great tool if you understand how to make it work for you. But again this is a program that you must understand fully to use. On a fully amortized loan you will pay very little in principal during the first few years. Also at the same time your property is appreciating. I hope you can see where this is going. And most programs only allow you to remain interest only for a short period of time, 2-5 yrs (a few go 10). Most ALL of my customers who are investors or financial advisors have interest only loans. They are not for everyone but are a solid answer for many.

 

-Easy loan Places- Still have guidelines. They will lead you to believe that they can give anyone a loan. NOT TRUE. They do this to get the phones to ring. In my opionion they are shady but the state of Ohio along with many other states have passed preditorial lending laws to keep mortgage companies from taking advantage of people. Some still do but it is getting better. If you think easy loan places are bad then you should see what a Hard Money Lender would do to you. There are no laws that govern hard money. Trust me it's BAD.

 

So i agree that many of Americans have gotten the feeling they deserve things they do not. We do carry their burden in the rates we all pay, but that is the least of our countries financial problems or problems in general.

[Guest stevil]

I agree, debt is a problem. People want to buy now, no matter what the price, which credit card companies and others oblige. And the problem is when they just make the minimum payments, and on a card with 19% APR or so, things can get ugly.

 

Sometimes you're in a jam though and need cash. It's usually unexpected troubles that fuck people over, but of course there are dumb ones that just spend away on non-essential items and get into huge debt fast.

 

For big purchases loans are necessary of course, because you can't save up for 30 years and then buy your house. I don't use credit cards, and try to have a minimum down payment of at least 10% for big purchases. The last 2 loans I had, I put 25% and 33% down.

[Kuruma]

Don't forget the bullshit that is "buy here, pay here", car dealerships. Yes. Lets take a fucked up used beater that should sell for $500, detail it, and bondo the fuck outta the rust, and patch it together with junkyard parts, then sell it for twice what it would be worth in mint condition, and charge 24% interest, driving the price up further. Then, when the thing breaks down, let's go ahead and fix it half-assed, and make a few cuts in some electrical wires or something to hasten the coming of yet another problem, so we can make even MORE money on repairs. Real nice racket.

 

They need to start capping the interest rates at a more reasonable level, and also capping the amount they can jack up the price to maybe 20% above actual value of the vehicle being sold, no more.

 

It's easy to argue that people should know better, but having talked to one woman today who did not know what a period was (and I don't mean the ones she gets), it's pretty obvious that most of the general public IS pretty stupid, and the government needs to step in to protect them from themselves, in the name of protecting the economy from all the bankruptcies that result from those business practices.

[zeitgeist57]

Originally posted by BIG PAPA:

-check cashers- I would rather pay 45 dollars for a 2 week 500 dollar loan than pay 2 bills late that will charge me 25 dollars each AND report to my credit costing me WAY more in interest later.

 

I strongly disagree with this statement. Research shows that the "payday lending" (the practice of using a post-dated check or electronic checking account information as collateral for a short-term loan) business model is designed to keep borrowers in debt, not to provide one-time assistance during a time of financial need. Most will allow 30 days before collections agencies are contacted.

 

I can talk more on this, especially in the difference of current lending practices and "predatory lending" practices as defined by legislation in the mid '90s, but I gotta get to work smile.gif

 

Suffice to say, that new and useful lending tools are either being abused by lenders, or are being utilized for people that shouldn't really qualify for them in the first place. CAVEAT EMPTOR, muthafuckas...people need to educate themselves before entering into a loan agreement.

[Nitrousbird]

Greg > Eric.

 

Greg knows his lending stuff. Ask anyone here who has had him do a re-fi for them. Greg saved my financial ass with a re-fi rolling in to big CC payments without increasing my home-loan payment (CC's were from being unemployed and closing on a house only a couple weeks from getting laid off).