Is predatory lending practice the real issue regarding payday lending and title loans? If so, take note. I was recently lured into a getting a credit card issued by a bank with a promise of $20 off my purchase.
The “introductory rate” is 11.9 percent. Then it goes to 25.24 percent. If I miss a payment, it goes to 29.99 percent with an additional $35 penalty regardless of the monthly amount owed. Remember the Fed funds rate has been 0.25 percent since December 2008. The prime rate has been 3.25 percent since January 2009.
It seems to me a bank charging 823 percent over the prime rate and 11,986 percent over the Fed funds rate is just as predatory.
I have an excellent credit score, good income and more assets than liabilities. If someone with limited resources and minimum wage is shut out of the regular lending institutions, where will the person go to get a loan?
If the banks bemoan the regulations they are under, it seems to me the problem is not payday lending companies, but the Washington nannies who think they can “protect us.”
Government wants to “help us” so it passes laws and regulations (housing for the poor, for example).
Reality sets in and it is a failure (housing bust) so the government looks for a scapegoat (banks). The government passes more regulations (greater lending controls) to solve the problem it created, which creates another problem (payday lending) that now needs government help to resolve.
See the trend? Now do you understand why we need smaller government?