Vulture (predatory) lenders

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MemberSince99
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Vulture (predatory) lenders

Postby MemberSince99 » Tue Jan 15, 2013 3:18 pm

I was just reading a thread on the subject on the FICO forums. Since I can't post there, figured I'd post here.

They were talking about how one of those places would loan you 10k and then over 84 months you'd pay them back 64k. WOW! That makes credit cards look very reasonable indeed even at penalty APR.

I was a contractor for one of those places, the scumbags who advertise payday and car loans on the radio. I actually read the paperwork they have you sign, and they put EVERYTHING in their favor. (Naturally, would you expect anything else?) They would give you a loan on your vehicle, and the paperwork actually said the didn't mind if you didn't pay them back. Why? Because they would loan you much less than they could get for the vehicle, then take the vehicle and sell it so no problem if you don't want to pay, just hope you like walking.

Another wonderful product they had they called "Smart" loans. My thought was if you do that you're anything but smart. They'd loan you 1000 dollars and in 6 months you'd pay them back over 3000.

You legal types might be thinking how did these vultures legally charge that? Isn't it illegal to charge that high an APR? Well yes in some states it is. So how did they get around it? As you folks may know, where there is a will there is a way around the law (and corporate America hires very smart people to find those ways around the law, ALWAYS). The trick is, they don't charge you that much in interest, only a small amount; instead they charge you a "broker fee" for setting up your loan with a company that they own, which is not illegal and which there is no limit on such a fee as opposed to interest amount. THAT is the trick to it. As I said when profits are involved there is always a clever way around the law to screw you and these folks make their living finding those ways so they are damn good at it.
You've probably already figured it out, but please do NOT do business with these places. It's economic suicide. It's easy for me to say find another way but the truth is they only prey on those without any other way unfortunately for them. Pawn stuff if you have to, don't get suckered in, or you'll be paying your future away for today.


kcarter609
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Postby kcarter609 » Tue Jan 15, 2013 5:05 pm

Sounds like I'm in the wrong business........

Active Cards:
Chase Freedom 10+10 Visa Signature ($9k Limit - 8/2012)
Chase Sapphire Preferred ($10k Limit - 2/2013)
Chase Ink Plus ($7k Limit - 2/2013)
Discover IT ($9.5k Limit - 10/2012)
AMEX Zync (No Pre-set Limit - 1/2010)
AMEX Blue Cash Everyday ($20k Limit - 1/2013 - Backdate to 1/2010)

MemberSince99
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Postby MemberSince99 » Wed Jan 16, 2013 8:23 am

I prefer an honest living where I go home at the end of the day and I can feel that I make an honest living. I was so embarrassed that I worked there, that I wouldn't tell my mom where I worked or what sort of company it was. I didn't know when I got hired I only found out after the fact (yes I know that's bad, but I was a contractor I wanted a job, I had no idea what those places were all about I'd never dealt with them before).

So my bad there. I didn't last there long. It's a small step above the mafia in terms of respectability - the difference is they won't come and break your knees if you don't pay them. But you may end up wishing they HAD instead of what they will do to you, which is drag you into court and get a garnishment against you and you will pay them for the rest of your natural life when they get done with penalties and fees and so on. If that happens you might as well go for BK, it's the only chance you have to get away from these vultures.

I found it interesting. Some of them were amoral, and would make the argument that they are provding a "service" to people that traditional lenders won't touch, due to a poor credit history, which is true in that their customers do not have any other option (or they wouldn't be there), and as a result of the increased risk of dealing with these people, they needed to be better compensated for that. Ok, fair enough on the surface, I mean granted traditional lenders do the same thing - the higher your score the better your terms generally, so to a degree certainly that's reasonable, who could argue with that?
HOWEVER, it's one thing to charge higher rates to higher risk, and it's another to make your living off the backs of those who can least afford to do this, but are driven by desperation or insanity to put bread on the table for today at the cost of paying for it for eternity. Yet that's what they do, they prey on the desperate and they charge them ROYALLY. Yeah you can eat for today, we'll loan you a grand, you are just going to pay us back over 3 grand during the next 6 months, but if you can't do that we'll roll you over into a new loan with even higher terms, and we'll just charge you every penny we can get until we can't get any more blood from you, using the legal system to take everything we can, until you are bled dry. Yes, that's really what it is, and that's what the amoral people don't bother to delve into. I guess they have to justify to themselves what they do for a living somehow, much like the Nazi SS officers I'm sure convinced themselves what they were doing was right and just. This isn't on the scale of mass murder, I'm not saying that, but it sure is on the scale of economic devastation for the bottom rung of society.

Anyway, I'm going to say again, please if at all possible do NOT do business with these sort of lenders. I'm sure most of you know that already, but it bears repeating.



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