Author Topic: This loan is not a loan  (Read 4207 times)

JAYSLOL

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This loan is not a loan
« on: December 03, 2019, 10:41:16 PM »
Apparently this “Savings Loan” is designed to help trick people who don’t know how to handle money or save rebuild their credit lose their money efficiently.  All the fees and downsides of a high interest predatory loan with no actual money up front.  Who wouldn’t want to rebuild their credit lose 2/3rds of their money for no fucking reason.  Unbelievable that this is even allowed to exist. 

https://globalnews.ca/news/6228663/savings-loans-credit-repair-loans-canada/?utm_source=GlobalOkanagan&utm_medium=Facebook&fbclid=IwAR0oEOwuouQPp0xqhCV7QeMXXjUgBidSJDeexH3o31NDhDSVk7_C52ZPp6I

Wrenchturner

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Re: This loan is not a loan
« Reply #1 on: December 03, 2019, 10:52:37 PM »
I haven't read the whole article yet, but I generally don't sign loan contracts on my work lunch break without even reading them(as per the article).

Not sure where people keep getting the idea that loaners are supposed to be your friend.

But I agree predatory lending is pretty out of hand in Canada.

JAYSLOL

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Re: This loan is not a loan
« Reply #2 on: December 03, 2019, 11:00:51 PM »
Yes, that was colossally stupid of him to sign for a loan without reading everything, especially from that type of lender.  I just can’t believe this “product” even exists.

gooki

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Re: This loan is not a loan
« Reply #3 on: December 04, 2019, 01:12:57 AM »
That “product” should be illegal.

Malcat

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Re: This loan is not a loan
« Reply #4 on: December 04, 2019, 05:44:26 AM »
Yes, that was colossally stupid of him to sign for a loan without reading everything, especially from that type of lender.  I just can’t believe this “product” even exists.

I think that the vast, overwhelming majority of people who use those types of lenders don't read their loan documents at all and do trust that the institutions are operating within some kind of regulated guidelines.

I live in a neighbourhood that has the distinction of having the highest concentration of pay-day-loan/money mart type businesses in the country.

A lot of research has gone into understanding why people use these services over conventional banks, and a main driver is they feel uncomfortable with and don't trust the big banks. They actually trust these extortionate lenders more.

So yeah, I can see how easily the clients of these places get sucked into horrendous contracts that they don't actually read.

Kazyan

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Re: This loan is not a loan
« Reply #5 on: December 04, 2019, 07:52:30 AM »
Oh, look, the credit system is eating its own tail.

Wrenchturner

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Re: This loan is not a loan
« Reply #6 on: December 04, 2019, 10:21:36 AM »
A lot of research has gone into understanding why people use these services over conventional banks, and a main driver is they feel uncomfortable with and don't trust the big banks. They actually trust these extortionate lenders more.

That makes sense.  I was wondering why people would make this mistake.

TheGrimSqueaker

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Re: This loan is not a loan
« Reply #7 on: December 04, 2019, 06:02:55 PM »
A lot of research has gone into understanding why people use these services over conventional banks, and a main driver is they feel uncomfortable with and don't trust the big banks. They actually trust these extortionate lenders more.

That makes sense.  I was wondering why people would make this mistake.

Some people are not allowed to open savings or checking accounts at a bank or credit union because they're in the Chex system (or one of the other reporting systems) due to fraud, overdrafts, or other misuse of a bank account.

Getting in trouble with a checking account is a lot like getting in trouble with a credit card, a defaulted student loan, or a broken lease: when you make a mess or allow a mess to happen, you have to clean it up before other people will trust you. Until people with Chex problems go back and clean up the mess they made (or allowed someone else to make using their account), they can't be a customer with an account, and for my credit union at least, you do have to be an account-holding customer before you're eligible for a mortgage or car loan, much less a personal loan.

Until there's a widespread outbreak of responsibility in the general public, I foresee an ongoing consumer demand for payday loan or high interest loan consolidation services.

Malcat

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Re: This loan is not a loan
« Reply #8 on: December 04, 2019, 06:10:55 PM »
A lot of research has gone into understanding why people use these services over conventional banks, and a main driver is they feel uncomfortable with and don't trust the big banks. They actually trust these extortionate lenders more.

That makes sense.  I was wondering why people would make this mistake.

Some people are not allowed to open savings or checking accounts at a bank or credit union because they're in the Chex system (or one of the other reporting systems) due to fraud, overdrafts, or other misuse of a bank account.

Getting in trouble with a checking account is a lot like getting in trouble with a credit card, a defaulted student loan, or a broken lease: when you make a mess or allow a mess to happen, you have to clean it up before other people will trust you. Until people with Chex problems go back and clean up the mess they made (or allowed someone else to make using their account), they can't be a customer with an account, and for my credit union at least, you do have to be an account-holding customer before you're eligible for a mortgage or car loan, much less a personal loan.

Until there's a widespread outbreak of responsibility in the general public, I foresee an ongoing consumer demand for payday loan or high interest loan consolidation services.

I live in Canada, so I have no idea what you are talking about.

JAYSLOL

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Re: This loan is not a loan
« Reply #9 on: December 04, 2019, 10:07:51 PM »
Until there's a widespread outbreak of responsibility in the general public, I foresee an ongoing consumer demand for payday loan or high interest loan consolidation services.

Too true.  The world sure would be a lot better off if Mustachianism (or at least common sense and responsibility) went mainstream, of course the world might not be quite as entertaining. 

gooki

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Re: This loan is not a loan
« Reply #10 on: December 05, 2019, 12:20:50 AM »
A lot of research has gone into understanding why people use these services over conventional banks, and a main driver is they feel uncomfortable with and don't trust the big banks. They actually trust these extortionate lenders more.

That makes sense.  I was wondering why people would make this mistake.

Some people are not allowed to open savings or checking accounts at a bank or credit union because they're in the Chex system (or one of the other reporting systems) due to fraud, overdrafts, or other misuse of a bank account.

Getting in trouble with a checking account is a lot like getting in trouble with a credit card, a defaulted student loan, or a broken lease: when you make a mess or allow a mess to happen, you have to clean it up before other people will trust you. Until people with Chex problems go back and clean up the mess they made (or allowed someone else to make using their account), they can't be a customer with an account, and for my credit union at least, you do have to be an account-holding customer before you're eligible for a mortgage or car loan, much less a personal loan.

Until there's a widespread outbreak of responsibility in the general public, I foresee an ongoing consumer demand for payday loan or high interest loan consolidation services.

But we don’t need predatory lending to fix these issues. So why do we allow them to exist.

Alternatepriorities

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Re: This loan is not a loan
« Reply #11 on: December 05, 2019, 12:55:16 AM »
I can’t believe they can get away with calling that a “loan”... I think my favorite line of BS was “the company will transfer customers to its “retention department” to try to “re-educate” them about their financial situation and why they were unable to obtain traditional credit, as well as the benefits of a savings loans, he told Global News.”


Malcat

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Re: This loan is not a loan
« Reply #12 on: December 05, 2019, 06:20:06 AM »
A lot of research has gone into understanding why people use these services over conventional banks, and a main driver is they feel uncomfortable with and don't trust the big banks. They actually trust these extortionate lenders more.

That makes sense.  I was wondering why people would make this mistake.

Some people are not allowed to open savings or checking accounts at a bank or credit union because they're in the Chex system (or one of the other reporting systems) due to fraud, overdrafts, or other misuse of a bank account.

Getting in trouble with a checking account is a lot like getting in trouble with a credit card, a defaulted student loan, or a broken lease: when you make a mess or allow a mess to happen, you have to clean it up before other people will trust you. Until people with Chex problems go back and clean up the mess they made (or allowed someone else to make using their account), they can't be a customer with an account, and for my credit union at least, you do have to be an account-holding customer before you're eligible for a mortgage or car loan, much less a personal loan.

Until there's a widespread outbreak of responsibility in the general public, I foresee an ongoing consumer demand for payday loan or high interest loan consolidation services.

But we don’t need predatory lending to fix these issues. So why do we allow them to exist.

Just googled Chex, we don't have anything like that in Canada, which is where the article is. So even less reason for these kinds of lenders to be allowed to exist, especially since we tend to be more amenable to regulation up here.

I didn't know that US banks had a system where it can be difficult to even get a basic bank account. I can see how that would drive a lot of people towards alternative, suboptimal options.

PDXTabs

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Re: This loan is not a loan
« Reply #13 on: December 05, 2019, 11:13:04 AM »
Some people are not allowed to open savings or checking accounts at a bank or credit union because they're in the Chex system (or one of the other reporting systems) due to fraud, overdrafts, or other misuse of a bank account.

Many credit unions will allow you to open a savings account even with Chex problems. However, if you have Chex problems you very well may have a court order outstanding to garnish anything in that savings account. The shitty thing about this is that many states have limits on what can and can not be garnished (OR, for example), but you had better show up in court to defend yourself, which if you have Chex problems you probably aren't going to.
« Last Edit: December 05, 2019, 11:14:37 AM by PDXTabs »

Alternatepriorities

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Re: This loan is not a loan
« Reply #14 on: December 05, 2019, 11:34:45 AM »
After thinking about this a bit more it occurs to me that these "Credit Repair Loans" are actually cheating both the consumer who gets them and the credit scoring alogrithms... The whole idea of a credit score is based on thinking that if other companies are willing to lend this person money we should too. Since they are not loaning any money they are not taking any risk... The credit score algorithm is treating this like an installment loan, but it should be treating it like paying your utilities on time every month... Fix that loophole and they won't be able to sell this as a "loan" anymore.

I'm all for personal responsibility and sign up for a loan on your lunch break without reading it is madness. But the audacity of calling this "product" a "loan" and then specifically targeting people who clearly don't understand the financial system sets me off a bit.

TheGrimSqueaker

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Re: This loan is not a loan
« Reply #15 on: December 05, 2019, 04:03:13 PM »
A lot of research has gone into understanding why people use these services over conventional banks, and a main driver is they feel uncomfortable with and don't trust the big banks. They actually trust these extortionate lenders more.

That makes sense.  I was wondering why people would make this mistake.

Some people are not allowed to open savings or checking accounts at a bank or credit union because they're in the Chex system (or one of the other reporting systems) due to fraud, overdrafts, or other misuse of a bank account.

Getting in trouble with a checking account is a lot like getting in trouble with a credit card, a defaulted student loan, or a broken lease: when you make a mess or allow a mess to happen, you have to clean it up before other people will trust you. Until people with Chex problems go back and clean up the mess they made (or allowed someone else to make using their account), they can't be a customer with an account, and for my credit union at least, you do have to be an account-holding customer before you're eligible for a mortgage or car loan, much less a personal loan.

Until there's a widespread outbreak of responsibility in the general public, I foresee an ongoing consumer demand for payday loan or high interest loan consolidation services.

I live in Canada, so I have no idea what you are talking about.

I lived in Alberta for 22 years. Let me break it down for you with some slight changes to the terminology, because I guarantee there are unreliable and untrustworthy people in Canada who commit shenanigans.

Banks and trust companies, such as Canada Trust and the other regionals that aren't quite what we used to call the Big Five, don't sit by idly while people misuse checking and savings accounts. When a customer does something blatantly fraudulent, such as by overdrafting a chequing account, knowingly writing bad cheques, depositing empty envelopes or stolen cheques, or otherwise abusing the account, there are predictable consequences.

First, the bank makes all reasonable efforts to track down and recover the money. There are NSF fees and penalties, often $50 apiece or higher, that apply when a person overdrafts the account. There are interest fees that accrue when an account balance is negative. There's also what's called a right of offset (or sometimes a right of set-off) that allows the bank to debit a customer's account to cover a shortfall on another, without necessarily telling the customer or getting permission.

TransUnion and Equifax have Canadian branches and collect information about creditworthiness. Among the things that can be reported to these agencies are outstanding debts to financial institutions due to unpaid NSF fees. Simply walking away from overdraft fees and abandoning an empty account, and then opening another account, isn't a viable strategy. The low number of banking institutions (compared to, say, the USA) reduce the need for massive databases like Chex, but banks do actually keep track of customers that rip them off and that haven't fixed the mess they made.

When a customer makes a mess involving a bank account, they have two options: to clean up the mess they made, and straighten up and fly right, or to do the opposite and try to evade responsibility. If a person makes the latter choice consistently enough, and if the offenses are deliberate, repeated, and fraudulent to the point where criminal charges become necessary, the bank eventually loses interest. Financial institutions do have the right to refuse to do business with a customer. In the province of Ontario, for example, a person who has committed a crime against a bank within the last 7 years does not have the automatic right to open an account. Nor does a person who has used a bank account to break the law such as by laundering money from criminal activities.

This is what I mean by a bank not wanting to do business with a customer.

There's such a thing as a person so irresponsible or malicious that they aren't eligible for accounts, much less loans, from financial institutions. Such people can and do resort to non-traditional and predatory lenders. There are also people who, for whatever reason, can't provide the necessary identification or initial deposit to open an account. Those individuals do end up "unbanked".

slugline

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Re: This loan is not a loan
« Reply #16 on: December 06, 2019, 08:48:36 AM »
Do I understand this correctly? People to agree to make monthly payments for three years, and in return they get a portion of that money back and a good word sent to the credit bureaus? This is the ultimate free money spigot for the "lender" and I can't believe this is real. I'd seriously look into investing in such a business myself if I wasn't so fond of my soul.

Alternatepriorities

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Re: This loan is not a loan
« Reply #17 on: December 06, 2019, 12:35:18 PM »
Do I understand this correctly? People to agree to make monthly payments for three years, and in return they get a portion of that money back and a good word sent to the credit bureaus? This is the ultimate free money spigot for the "lender" and I can't believe this is real. I'd seriously look into investing in such a business myself if I wasn't so fond of my soul.

Your soul is the minimum acceptable collateral to invest in such a business...

imadandylion

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Re: This loan is not a loan
« Reply #18 on: December 06, 2019, 12:39:19 PM »
What you described sounds vaguely similar to the idea of rebate promos of any big-ticket item purchase, like a big screen television. Customer convince themselves they're getting a great deal on something. They have to pay the full price tag, then mail in for a rebate to get their money back.

Why even bother. It's like a money hostage situation.

Wrenchturner

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Re: This loan is not a loan
« Reply #19 on: December 06, 2019, 12:40:12 PM »
I don't think credit should be available to people who even the banks won't lend to.  For the sake of a steelman, is there a case where people might want to use a payday loan type service for valid reasons?

slugline

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Re: This loan is not a loan
« Reply #20 on: December 06, 2019, 01:28:47 PM »
What you described sounds vaguely similar to the idea of rebate promos of any big-ticket item purchase, like a big screen television. Customer convince themselves they're getting a great deal on something. They have to pay the full price tag, then mail in for a rebate to get their money back.

The customer has to wait 8-10 weeks to get not only the rebate but the television itself as well.

Malcat

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Re: This loan is not a loan
« Reply #21 on: December 06, 2019, 01:56:41 PM »
I don't think credit should be available to people who even the banks won't lend to.  For the sake of a steelman, is there a case where people might want to use a payday loan type service for valid reasons?

Well...not everyone who has bad credit is irresponsible with money. Many are people who were at one point irresponsible with money or at one point faced extreme circumstances that resulted in major hit to their credit that takes several years to recover from. Even worse are the people who used to have a spouse who was irresponsible with money and they end up guilty by association.

Suffice to say, in my many dealings with people in shelters, I've seen every permutation of shitty financial situations. In my dealings with the finances of medical professionals, I've seen more than a few doctors and dentists whose credit is terrible due to shit that happened during school.

That said, I don't think any of them should engage the services of these predatory lenders.

Wrenchturner

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Re: This loan is not a loan
« Reply #22 on: December 06, 2019, 09:19:44 PM »
I don't think credit should be available to people who even the banks won't lend to.  For the sake of a steelman, is there a case where people might want to use a payday loan type service for valid reasons?

Well...not everyone who has bad credit is irresponsible with money. Many are people who were at one point irresponsible with money or at one point faced extreme circumstances that resulted in major hit to their credit that takes several years to recover from. Even worse are the people who used to have a spouse who was irresponsible with money and they end up guilty by association.

Suffice to say, in my many dealings with people in shelters, I've seen every permutation of shitty financial situations. In my dealings with the finances of medical professionals, I've seen more than a few doctors and dentists whose credit is terrible due to shit that happened during school.

That said, I don't think any of them should engage the services of these predatory lenders.

That's interesting and good to know.  I feel like we are left in the same position though, should these companies be made illegal?  This sounds like social security territory of some sort, maybe there is a public sector solution? (I am skeptical that such a thing would be an improvement)

Malcat

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Re: This loan is not a loan
« Reply #23 on: December 07, 2019, 07:00:48 AM »
I don't think credit should be available to people who even the banks won't lend to.  For the sake of a steelman, is there a case where people might want to use a payday loan type service for valid reasons?

Well...not everyone who has bad credit is irresponsible with money. Many are people who were at one point irresponsible with money or at one point faced extreme circumstances that resulted in major hit to their credit that takes several years to recover from. Even worse are the people who used to have a spouse who was irresponsible with money and they end up guilty by association.

Suffice to say, in my many dealings with people in shelters, I've seen every permutation of shitty financial situations. In my dealings with the finances of medical professionals, I've seen more than a few doctors and dentists whose credit is terrible due to shit that happened during school.

That said, I don't think any of them should engage the services of these predatory lenders.

That's interesting and good to know.  I feel like we are left in the same position though, should these companies be made illegal?  This sounds like social security territory of some sort, maybe there is a public sector solution? (I am skeptical that such a thing would be an improvement)

I have no idea what the answer is, but yes, we both agree that the answer is *not* predatory financial businesses that profit immensely off of those who either lack the judgement or capacity to understand that these "services" are just digging their hole deeper.

I did really want to point out though that A LOT of people with bad credit are not just careless assholes who deserve to be punished.

My credit was once damaged so badly that I couldn't get a regular cell phone plan.

TheGrimSqueaker

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Re: This loan is not a loan
« Reply #24 on: December 07, 2019, 11:58:28 AM »
What you described sounds vaguely similar to the idea of rebate promos of any big-ticket item purchase, like a big screen television. Customer convince themselves they're getting a great deal on something. They have to pay the full price tag, then mail in for a rebate to get their money back.

The customer has to wait 8-10 weeks to get not only the rebate but the television itself as well.

That assumes the rebate is ever paid.

Wrenchturner

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Re: This loan is not a loan
« Reply #25 on: December 07, 2019, 12:27:41 PM »
I don't think credit should be available to people who even the banks won't lend to.  For the sake of a steelman, is there a case where people might want to use a payday loan type service for valid reasons?

Well...not everyone who has bad credit is irresponsible with money. Many are people who were at one point irresponsible with money or at one point faced extreme circumstances that resulted in major hit to their credit that takes several years to recover from. Even worse are the people who used to have a spouse who was irresponsible with money and they end up guilty by association.

Suffice to say, in my many dealings with people in shelters, I've seen every permutation of shitty financial situations. In my dealings with the finances of medical professionals, I've seen more than a few doctors and dentists whose credit is terrible due to shit that happened during school.

That said, I don't think any of them should engage the services of these predatory lenders.

That's interesting and good to know.  I feel like we are left in the same position though, should these companies be made illegal?  This sounds like social security territory of some sort, maybe there is a public sector solution? (I am skeptical that such a thing would be an improvement)

I have no idea what the answer is, but yes, we both agree that the answer is *not* predatory financial businesses that profit immensely off of those who either lack the judgement or capacity to understand that these "services" are just digging their hole deeper.

I did really want to point out though that A LOT of people with bad credit are not just careless assholes who deserve to be punished.

My credit was once damaged so badly that I couldn't get a regular cell phone plan.

Sounds like a complicated issue.  Is access to credit a right?  Seems almost necessary in modern times.  Certainly seems necessary to move ahead from a financial calamity, like after a bankruptcy.  But if credit becomes a right, there will be some bad actors that keep abusing the issuer, over and over again.  I don't see an easy solution.

Malcat

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Re: This loan is not a loan
« Reply #26 on: December 07, 2019, 12:55:39 PM »
I don't think credit should be available to people who even the banks won't lend to.  For the sake of a steelman, is there a case where people might want to use a payday loan type service for valid reasons?

Well...not everyone who has bad credit is irresponsible with money. Many are people who were at one point irresponsible with money or at one point faced extreme circumstances that resulted in major hit to their credit that takes several years to recover from. Even worse are the people who used to have a spouse who was irresponsible with money and they end up guilty by association.

Suffice to say, in my many dealings with people in shelters, I've seen every permutation of shitty financial situations. In my dealings with the finances of medical professionals, I've seen more than a few doctors and dentists whose credit is terrible due to shit that happened during school.

That said, I don't think any of them should engage the services of these predatory lenders.

That's interesting and good to know.  I feel like we are left in the same position though, should these companies be made illegal?  This sounds like social security territory of some sort, maybe there is a public sector solution? (I am skeptical that such a thing would be an improvement)

I have no idea what the answer is, but yes, we both agree that the answer is *not* predatory financial businesses that profit immensely off of those who either lack the judgement or capacity to understand that these "services" are just digging their hole deeper.

I did really want to point out though that A LOT of people with bad credit are not just careless assholes who deserve to be punished.

My credit was once damaged so badly that I couldn't get a regular cell phone plan.

Sounds like a complicated issue.  Is access to credit a right?  Seems almost necessary in modern times.  Certainly seems necessary to move ahead from a financial calamity, like after a bankruptcy.  But if credit becomes a right, there will be some bad actors that keep abusing the issuer, over and over again.  I don't see an easy solution.

Again, that's getting beyond the scope of what I'm trying to say. I'm simply arguing against the perception of all people with bad credit being undeserving and untrustworthy with credit.

Wrenchturner

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Re: This loan is not a loan
« Reply #27 on: December 07, 2019, 02:10:30 PM »
Again, that's getting beyond the scope of what I'm trying to say. I'm simply arguing against the perception of all people with bad credit being undeserving and untrustworthy with credit.
Gotcha. 

Can I ask what the circumstances were for you when your credit got destroyed?

Malcat

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Re: This loan is not a loan
« Reply #28 on: December 07, 2019, 07:36:14 PM »
Again, that's getting beyond the scope of what I'm trying to say. I'm simply arguing against the perception of all people with bad credit being undeserving and untrustworthy with credit.
Gotcha. 

Can I ask what the circumstances were for you when your credit got destroyed?

You can ask, but that's a long, ugly story with way more personal details than I'm willing to share. It was a fucking horror show though, and one person is dead as a direct result.

Some of us just have really, really bad things happen.

TheGrimSqueaker

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Re: This loan is not a loan
« Reply #29 on: December 07, 2019, 11:11:49 PM »
I did really want to point out though that A LOT of people with bad credit are not just careless assholes who deserve to be punished.

Absolutely not: some of them are the victims of identity theft or worse. It takes a very long time to recover especially if the victim doesn't know where the unauthorized charges are, and if the thief is a family member the victim may not be able to clear his or her name without pressing charges. Likewise-- and this is not as much an issue in Canada-- a sick person can rack up incredible amounts of medical debt. Divorce can also devastate a person's finances due to the need to basically liquidate a household and start anew, possibly with children to support.

There's also a middle ground that contains people who are yoked financially or legally to a very irresponsible person. Although the person may be extremely responsible and conscientious, he or she is cleaning up after a person whose capacity to create messes greatly exceeds the resources of any normal human being. Sooner or later, the responsible person can't clean up, and that's the point at which it starts to affect the lender. Out of simple self-preservation, the lender has to behave as though the responsible person is just as much of a risk as the irresponsible person to whom he or she is yoked.

One example is a married couple in a community property state in which one partner is a spendthrift, a gambler, an addict, or mentally ill with a problem that leads to irresponsible financial decisions ranging from excessive, unwise gifts to compulsive shopping. The innocent spouse ends up on the hook for all the debt because in a community property state both partners are jointly and severally responsible for debts incurred during the marriage. Yet once the shenanigans are discovered, the decision to STAY married to a financial abuser is complex but still a decision. Plenty of people truly believe that it's better to be abused than to be alone, or that the person abusing them will die if they experience the otherwise predictable consequences of their behavior, and that by continuing to accept the abuse they can prevent the death or downfally of the person abusing them. Until the victim breaks out of that mindset and becomes willing to desert Mr. Micawber, he or she will continue to enable the financial abuser and to share the consequences. From a lender's perspective, that makes the victim a bad credit or lending risk. It's not fair, and if the financial abuse goes on long enough it makes it even more difficult for the abused person to leave.

Paul der Krake

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Re: This loan is not a loan
« Reply #30 on: December 07, 2019, 11:33:33 PM »
A lot of research has gone into understanding why people use these services over conventional banks, and a main driver is they feel uncomfortable with and don't trust the big banks. They actually trust these extortionate lenders more.

That makes sense.  I was wondering why people would make this mistake.

Some people are not allowed to open savings or checking accounts at a bank or credit union because they're in the Chex system (or one of the other reporting systems) due to fraud, overdrafts, or other misuse of a bank account.

Getting in trouble with a checking account is a lot like getting in trouble with a credit card, a defaulted student loan, or a broken lease: when you make a mess or allow a mess to happen, you have to clean it up before other people will trust you. Until people with Chex problems go back and clean up the mess they made (or allowed someone else to make using their account), they can't be a customer with an account, and for my credit union at least, you do have to be an account-holding customer before you're eligible for a mortgage or car loan, much less a personal loan.

Until there's a widespread outbreak of responsibility in the general public, I foresee an ongoing consumer demand for payday loan or high interest loan consolidation services.

I live in Canada, so I have no idea what you are talking about.
Who allowed you on our internet?

Chex systems are not widely known about, by anyone, but it's a pretty simple system. The UK has a similar thing, if you have done fishy stuff in the past at Natwest, good luck opening an account at RBS across the street. Banking regulations tend to follow similar patterns worldwide, so I'd be surprised if Canadian banks didn't have a setup that essentially does the same thing.

Wrenchturner

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Re: This loan is not a loan
« Reply #31 on: December 08, 2019, 12:13:01 PM »
Again, that's getting beyond the scope of what I'm trying to say. I'm simply arguing against the perception of all people with bad credit being undeserving and untrustworthy with credit.
Gotcha. 

Can I ask what the circumstances were for you when your credit got destroyed?

You can ask, but that's a long, ugly story with way more personal details than I'm willing to share. It was a fucking horror show though, and one person is dead as a direct result.

Some of us just have really, really bad things happen.

I'll take your word for it.  I'm sorry you had to go through that.

FrankExchangeOfViews

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Re: This loan is not a loan
« Reply #32 on: December 08, 2019, 01:55:24 PM »
There are actually very mustachian ways to use these types of loans, just not from the lenders that charge outrageous interest rates. Mainly, the use is for pumping your credit score to take out a large loan for a home or business.

About 10% of a FICO score depends upon your credit mix i.e. what types of loans you previously and currently have. Primarily this means a history of installment loans and credit cards, but for some scoring models will also break down as mortgage, auto loans, bank cards, store cards, etc. Now, if you've lived a mostly Mustachian life and have never bought a car on credit and don't have student loan debt you likely have no history of installment loans by the time you are ready to buy a house. Adding an installment loan of any flavor will likely add an immediate boost of 20-40 points to your score, despite the inquiry and new credit on your report. Paying it for a few months will add another 10-20 points.

So how do you execute?
6-11months before you need the mortgage you start the ball rolling. Don't go to a loan shark, but your local credit union. They probably offer a product called a savings or deposit secured loan that charges the federal funds rate plus 2.5%. Put the minimum secured loan amount (usually $500) into a 12 month CD that likely pays the federal funds rate + 1% and take out a secured loan on this amount. In all you'll pay about 10 bucks of net interest for this "loan." Now when you take out the mortgage with a boosted credit score you will likely be approved for a lower rate, probably in the range of .1-.4%. But that small amount of interest decreease on a large amount of money over 30 years is vastly more than the tenner you gave to your credit union.

Malcat

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Re: This loan is not a loan
« Reply #33 on: December 08, 2019, 02:31:17 PM »
Again, that's getting beyond the scope of what I'm trying to say. I'm simply arguing against the perception of all people with bad credit being undeserving and untrustworthy with credit.
Gotcha. 

Can I ask what the circumstances were for you when your credit got destroyed?

You can ask, but that's a long, ugly story with way more personal details than I'm willing to share. It was a fucking horror show though, and one person is dead as a direct result.

Some of us just have really, really bad things happen.

I'll take your word for it.  I'm sorry you had to go through that.

Thanks.

It keeps me interesting, so there's that ;)