Assignment 16 - Joseph Cook

You’re a freshman in college, you’re taking a full college load, you’re working 2 part time jobs, and you’re behind on rent. You have bad credit and can’t get a loan. What do you do now? If you don’t pay the rent, you get kicked out. Well, there are a couple options. You could ask a friend for a hundred dollars, and pay it back when you can, the interest rate there can vary from 0% to 50% depending on the quality of the friend. You could rob a convenience store, and make a couple hundred bucks, but there are other consequences associated with that route, or you could get a title loan on your car from your friendly neighborhood TitleMax. Because according to their website, “When you’re a customer of TitleMax, we’re working together… as a team.” Nothing could ever go wrong, right? Well, no. What happens is, you get a loan based off of the value of your car for say, $1000, you agree to pay this in installments of $100 a week for 25 weeks, if you miss a payment, they come and take your car. If you manage to pay it off, then you’ve just bought $1000 for $2500. Sounds like another great deal from the friendly staff of TitleMax!

Similar situations trap people every day with title loans, buy here pay here car lots, payday advance locations, checks to cash shops, and hundreds of other fiscally ferocious fiends. These industries make millions, by taking that money from those who are living paycheck to paycheck. This predatory lending needs to be stopped. 18 states have legislation banning high cost payday lending, and more are on the way. Throughout this speech I’m gonna focus on what payday loans and title loans can do, how easy it is to start a similar business, buy here pay here car lots, and how you can prevent this from ruining your own life.

Payday loans seem like a quick and easy way to get cash, before your paycheck. All you have to do is walk in and say, I need cash. This is the lender’s trigger word. Once they know that you’re open to the idea, the lender will do anything to drag you under. One NPR researcher decided to sign up with fake credentials, but they put in their real phone number. They got approved for a $750 loan. With $225 interest for one week. That adds up to a yearly interest of 1300%. They declined the offer. But soon they started receiving phone calls from all over the globe, saying that they had been approved for loans of $1000, $1500, $2000, all the way up to $5000. They had only asked for $500. Their information was sold out to hundreds of lenders, even though the site said that the info was “secure.” To someone actually looking for a loan, this is an easy way to get trapped in the cycle of interest, retaking loans, and signing on with new loaners. This is nearly the same thing with title loans. You get a loan on your car, and you can’t pay it off because of the insanely high interest rate. Then, so your car doesn’t get repossessed, you take out a payday loan, and then you take another and another. This ruse has taken grasp upon millions of people down on their luck, and is a disgrace to America.

Some people, however don’t mind being a disgrace to America, if it means making a quick buck. Say you’ve got $1000 dollars, and a small storefront. That’s all you need to make all the dirty cash you want in the form of a buy here, pay here car lot. First you go out and buy an older car, that’s reliable enough. You sell it to somebody for $2000 in biweekly installments of $200. If they pay off the car, you’ve made $1000 dollars. But, if they miss even one payment, then you come and repossess the car. Now you’ve made around $500 dollars, you still have a car, and you didn’t have to do anything but wait. After doing this some more, you can afford a second car, and a third, and a fourth, slowly growing. Next thing you know, you’re selling and repossessing cars like crazy and you are getting thousands of dollars every week in payments. Bang. Free money. All you need is a car and no soul. You can also add cleaning fees for people who smoke in the car, making even more money off of those poor unfortunate souls.

These businesses are the reason that legislation needs to be put forth. Payday loans would be much more reliable and less of a scourge if they charged lower interest rates. Already several states have limits on the interest rates that can be charged. These industries can be made good. With lower interest rates, less strict policies, and less corporate greed, what once caused the downfall of many lower income families, can now boost them out of a rough spot. The Christmas season is when less fortunate families struggle the most. Heating costs more, with our crazy Kentucky weather, you never know what’s gonna happen to your car or house, and getting presents for children to keep the magic of Christmas alive for them. All of these put financial strain on families. The traps that everyone can fall into with these predatory industries can cause thousands of wasted dollars, and months of financial and emotional grief. Despite the “friendly staff who will work with you during your time of need,” the costs outweigh the rewards by 1000% annually. So next time you, your family, or a friend or loved one, is down on their luck, remember, Qwiki Ca$h is not the place to be. There are many financial support groups run by churches, charities, and other well-doers, who will really work with you in your time of need

In closing, I’d like to remind all of you that payday loans are not there for you, and that anybody with an old car and some sleazy sale techniques can fool you out of your hard earned money, and that there are many other ways to get through rough times, including friends, charities and churches. So next time you’re strapped for cash, and your friends are all just as broke as you are, rob a convenience store. You’ll be doing yourself a favor by not being caught in the web of debt spun by these malicious corporations. At least bail’s interest rate is 0 percent per year.