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Auto title lenders, whose practices are aligned with those dealing in payday loans, furniture leases, and cheaply made wheel-and-tire rentals, may soon be able to profit off of Michigan consumers should a bill in the state senate be passed.
The Detroit News reports a bill sponsored by Senate Majority Leader Randy Richardville of Monroe, Mich. — with an identical bill led by Rep. John Walsh of Livonia in the state House — would add a loophole to a century-old pawnbroker law to allow those affected to charge a 20 percent monthly “usage fee” to consumers, instead of the 3 percent charged now.
The state’s pawnbrokers are among those opposed to the bill, stating that such an increase would only lead to more defaults, affecting consumers “in an adverse way,” according to American Jewelry and Loan vice president Seth Gold.
As for who is in favor, two opposing lobbyists have found Georgia-based Select Management Resources to be the primary backer of Michigan Senate Bill No. 1138/House Bill No. 5954.
Should the bill go through, auto title lenders could act as pawnbrokers in Michigan, going around a ban of their usual business model in so doing. Further, a loan of $1,000 would go from accumulating a manageable $360 in interest over 12 months, to an insane $2,760 over the same period.
People of Detroit, rejoice!
Now it will be even easier to secure title loans for all those W-Bodies.
Lovely. A new way to screw those who can afford it least. Anybody else have any grand plans for making sure the bottom half stay that way? Disgusting.
Not that I support or oppose this bill in any way, but these types of loans are voluntary. It will make cash available to people who might not otherwise be able to get a loan. It’ll cost them, but in many cases, they may really need the cash at any cost.
On one hand, I have to agree with you. No one is forcing these people to make a terrible financial decision.
But on the other hand, no one is forcing people to start smoking crack or doing meth.
Both cases end with the consumer ruining their lives. Only one of those industries has prominent supporters within the government. At least open ones.
This. Many people cannot be trusted to handle themselves financially. Forever spiraling into more bad debt for depreciated assets. It’s terrible.
They end up in debt, on welfare, and unemployed. Then the taxpayers get to pay for it.
…but enough about GM.
Better my taxes going to these guys, than my savings being debased to pay for bankster trash.
Of course, best of all, just stop wasting tax money either way. Including on the deputies the pawn brokers recruit to shake down those who choose to pay them back with the middle finger.
Tax payers don’t have to pay for crackheads. Nor smokers with lung cancers. Nor banksters. Nor kids who picked a broke slut for a mom. Nor nothing else, either. Turning this dump into even more of a police state than it already is, because tax payers at the current level of police state, are forced to fund all the nonsense, is a poor excuse for making things progressively worse. Progressively as in progressivism.
Yep, I’ve savagely kicked myself for not choosing bankster school, too.
I’m in a line of work where I see the effects of Payday Lenders and Title pawns on a daily/hourly basis. I’m generally a proponent of letting the free market work, and that people are responsible for their actions (they are). But, PDL’s and Title Pawns are one of the few things that IMHO should be banned and or regulated out of business. With the high rates that we have here in Wisconsin, they often send people into a financial spiral that requires drastic action to recover from. Often, the consumer doesn’t even understand how the lender has a lien on the vehicle and it can be taken from them.
“Often, the consumer doesn’t even understand how the lender has a lien on the vehicle and it can be taken from them.”
It’s all there in the barely legible fine print on the transparent onionskin contract paper it’s hardly written on
“The large print giveth and the small print taketh away.”
Can we just admit that we need an exploited class to keep the system going.
We use to be better than this, we can be better again.
We’re all exploited in one way or another, no safe harbors here, folks
“no safe harbors here, folks” Does it have to be that way?
I don’t know larry, seems the way it’s been since the beginning of time, not saying it’s right, it’s just the way it works
One way or another? The one way I’m exploited sure doesn’t look as bad as the other way the poor exploited. Seems to me some harbors are a lot safer than others.
Nah, not really — that’s just how the Elizabeth Warrens of the world sucker people like you into keeping them rich.
Elizabeth Warren can sucker me whenever she likes because I like her, she’s got spunk, and I agree with much of the time.
That darned Elizabeth Warren and her shady government-backed subprime empire.
Ugh. I don’t know how payday loan peddlers sleep at night.
On a giant pile of money.
On a pile of money, surrounded by beautiful women.
… surrounded by CHEAP women
There, fixed it for you
There are so many Title/Payday loan places here in NM we’ve had to find a term to use for people who frequent them.
“Underbanked” def: Why the *(&^ don’t you belong to a credit union?
On top of a pile of money, surrounded by cheap beautiful women.
They’re not mutually exclusive. There are plenty of attractive people who would do bad, bad things for access to a car with working AC.
That’s what happens when you overdraft your account and forget to pay it back.
Welcome to the subprime crowd! Ace Cash Express is your new bank. And prepare to warm up to that little ignition device when you’re a day late with your car payment to the BHPH!
Before you know it, that title loan sends its tow truck over to pick up your Impala with those cute little adhesive fender vent thingies.
@bikegoesbaa: Why do they have to be cheap women? In that circumstance, I would go for top shelf, “expensive” women :)
“underbanked”
Perfect term! And it does to Savings & Loan, what prostitution does to consensual sex.
Probably pretty well. During grad school I became good in-school friends with a junior exec of Money Mart Canada. He had truly convinced himself that what their company was doing was offering a service to underprivileged communities and was in no way ripping off the users. I guess anyone can rationalize anything.
Their new game in Canada for the holidays is buying people’s gift-cards for %50 of face value.
Wow 50% You can alomst always get 80-95% on ebay (stop buying me Itunes giftcards people)
The sound of the ocean, when sleeping on the upper deck of the front row beach house, can be very calming, especially with a top shelf buzz.
My new year’s resolutions:
1) Get title shop license and open shop.
2) Get reality TV show on TruTV featuring wild, wacky, freaky hijinks at said title shop (aka Freak Show featuring dregs, whackos, insanes of abnormal society).
3) Profit.
You forgot 4) Marry a Kardashian
Why not, it goes with everything else on your Christmas list?
ick yuk
I had to look it up, but both of the guys mentioned (Senate Majority Leader Randy Richardville, and Rep. John Walsh) are both Republicans from somewhat affluent communities that sponsored this legislation… I feel like I am witnessing a scene from a very bad play in which it is legal for the wealthy to take from the poor and give to the rich…
Unfortunately, the people who frequent Pawn Shops, and use Payday Loans to exist will be the first in line to be exploited by this new form of extortion because they really don’t know better…
They’ll also be the first in line at the welfare office once the car gets repossessed and they can’t get to work.
I never heard of renting wheels or tires so I had to Google the term. Now I’ve seen everything.
When you only need them DUBs for the weekend.
Dubs, foo.
Really, you don’t have those little run-down wheel shops with “Rent Me” signs above them? They’re usually next to the “Buy Here, Pay Here” lots
People even sell organs.
Unless it’s something rare and collectable, you won’t get much. On the other hand if you have an old Moog or a Hammond B3, you may be able to buy the wheels outright.
It seems to me that the wheel / tire rental places are truly the most pointless and foolish enterprise within this space. It’s pandering to a certain demographic that must have at least 22’s (if not 24’s) all the way around and just doesn’t give a darn what it takes to get them.
I’ve seen a few of these places pop up over the last year. Still, free enterprise!
“American Jewelry and Loan vice president Seth Gold.”
So perfect. His name cannot be anything else.
I’m amazed that Seth McFarland didn’t already use “Seth Gold” as the name of a seedy character in one of his creations.
You know I didn’t connect the name at the time, but yesterday I heard a new version of Baby It’s Cold Outside (date rape Christmas song) with Seth McFarland and Sarah Barielles. Dude can sing in a very 1950s way. So can she.
I want a Krispy Kreme, but not if it comes from a location looking like that. What a depressing scene.
I’ve often wondered how these Check-In-2-Cash and ChecksMart and pay day advance places have stayed in existence, rather than being regulated away. They are just loan sharking, seemingly. They’re all over SW Ohio, can’t pass a strip mall without seeing one.
I find that whenever a business closes a title loan store moves in. The place I used to get my windows tinted, old 7/11s, old Pizza Huts, long-time family owned restaurants, shuttered banks. They never seem to build their own locations, just vulture the carcass of legitimate businesses. And they are probably outbidding people looking to start a real business.
We must be nearing payday lending market saturation.
That’s funny, because I tell my fiancee about that all the time- they’re like Hermit Crabs! In a 5-mile radius of my house over the years I’ve seen them move into abandoned fast-food restaurants, banks (irony!), Dunkin Donuts, Advance Auto Parts, mom & pop used car offices, gas stations, you name it.
It must be a very inexpensive turnkey operation. You need at a minimum what, a phone, a computer, a desk, two chairs, and a checkbook? And I think only 2 or 3 up-level companies are competing, but they call the individual businesses by many names.
Whenever we see a place go out of business, we jokingly ask one another “wonder how long till it’s a payday loan shop?”
Whenever I go back home to Ohio, all those vacated strip mall businesses are filled with gambling parlors.
I have literally never seen this. Gambling is heavily regulated here, and is only found in large casinos with hotels, from what I have seen.
Maybe it’s just a NE Ohio thing. It’s all over the Canton (Stark County) area.
And it’s depressing as hell. There are a lot of businesses that have disappeared to make way for these sleazy places.
As for the lousy games, these are for people desperate to gamble but without the money/reliable transportation to go to a real casino in Cleveland or Columbus. It’s the gambling version of someone so addicted to alcohol that they’ll drink turpentine to get drunk.
http://www.cantonrep.com/article/20110523/News/305239853
PrincipalDan hits one of the reasons above with the “underbanked.” You’ll also notice too that most of these operations advertise (and I assume do a brisk business) in wire transfers, mostly serving those sending money back to their home countries.
I wonder what the correlation is between liquor stores and payday/title loan businesses…
Rates at predatory lenders go up, liquor store sales go up??
Hmmmm…
So loan sharks reaming the poor for 20% APR is okay. But a manufacturer selling its cars directly to its customers is TEH END OF TEH WURLD!1!
Yeah makes perfect sense to me.
(Here in Virginia I think Predatory Lenders, Inc. can squeeze you for 33% APR)
20% APR?
It’s 20% PER MONTH (they call it a usage fee).
Gawwwwd daaaaaaaaaamn!!
I live here too so I decided to look it up:
22% per month for a title loan up to $700 + 5% if you are late with a payment. Interest rates decline as the loan amount goes up, but if I’m reading it right, I think they can raise the rate as you pay it off once you hit the triggers.
http://www.scc.virginia.gov/bfi/files/mvl_va.pdf
Payday though…
up to 36% APR + a 20% fee for the amount loaned.
http://www.scc.virginia.gov/bfi/files/pay_guide.pdf
22% per month works out to 987% APR.
33% APR is a pretty good deal, here in Wisconsin they are charging 300% APR on Title Loans and even more on PDL’s, just looked at one that was over 600% APR. The contracts have large disclosures on how much the credit is going to cost, but its ignored.
Absolutely! It’s pretty scary when you read up on those loans. They would make a Mafia loan shark blush
Between seeing this article and reading the Freep for the last week, Michigan’s lame-duck sessions must be the time when ALL the dirty deals are done.
It’s depressing to see how little newly (re-)elected legislators regard the people who vote them into office.
There is very little overlap between the people who vote for legislators that favor payday/title loans businesses, and the people who patronize payday/title loans businesses.
“As for who is in favor, two opposing lobbyists have found Georgia-based Select Management Resources to be the primary backer of Michigan Senate Bill No. 1138/House Bill No. 5954.”
In case it’s not already obvious, Select Management Resources is basically Loan Max, a (wait for it) title loan company.
http://www.trademarkia.com/loan-max-78498689.html
We have plenty of them here in Florida. They serve two purposes.
1) To separate people who can barely afford it from what little cash they do have.
2) Remind tourists they are in the wrong part of town.
The scrolling ad on my screen is for payday loan assistance. Got to love those story to advertiser algorithms.
Maybe there is a rent to own furniture store across the street so someone can make multiple poor financial decisions in one place.
Sad thing is the payday loans stores, and the rent to own stores are usually owned by the big banks with a local front, or should I say Mob when I say banks, or do they just handle collections?
Leave it up to the right-wing to figure out another ‘pro-business’ argument that never seems to actually help businesses. I’m genuinely at a loss for the fiscal conservatives out there who support these people. Do you think they’re actually being conservative when they openly support more aggressive loan sharking or am I just going to have to accept that you’re not really conservatives and you’re just free market capitalists?
I get that most of the quasi-support is in the form of ‘well they can do bad things if they want!’ which makes sense until you run into the fact that a depressed economic zone doesn’t have the income flow at the regional level to allow these people to operate. So either they depopulate and go to better income regions or in most cases they keep trudging along hoping to get enough money to move or find decent work. Do we all agree atleast that the economy is interconnected?
Where are the community activist decrying this vile, extortionist behavior? /sarcasm
What will be the breaking point for it to become another crisis that the government, err taxpayers have to clean up?
Actually most of the community activists who support alleviating poverty have long since rallied against these places. You do realize this is actually a core tenet of the fight against poverty, right? Eliminating these places and replacing them with credit unions is one pillar of the argument.
There is nothing pro-business about a bunch of predators, they harm the honest folk. These payday lenders and auto title lenders are nothing more than modern day Mr. Potters. From the late 30’s until the 80’s we had a fairly sound banking regulatory system. It was easy if you needed a car loan you went to your dealer or savings bank. Starting in the late 70’s the Financialization of the economy became fashionable. People forgot why regulations were enacted during the Great Depression. S&L’s were deregulated, then other financial sector deregulation became the Randian zeitgeist through the late 90’s with the repeal of Glass-Stegel and 2000 Commodity Futures Modernization Act and a lax SEC throughout the last decade. Getting back to a transparent banking regulatory system would be better for both consumers and business.
In my hood they have closed most of these places, and opened a bunch of restaurants, yea gentrification :)
But seriously, my personal beef is that this ruins my ability to buy broken cheap cars and fix then sell them. Ex: Buy 2002 Sentra for $600 with blown head gasket, put in junkyard motor bought for $250, sell on CL for $1800, pay mortgage for the month…
oh wait, this CAN”T be done when said Sentra has a blown HG and a $5000 lien. Nobody gets a car, I don’t profit from understanding how to fix stuff, and the junkyard only gets scrap value when LoanMax auctions their collateral. Brilliant.
One of several biblical references to Usury:
“And if you lend to those from whom you expect repayment, what credit is that to you? Even sinners lend to sinners, expecting to be repaid in full. But love your enemies, do good to them, and lend to them without expecting to get anything back. Then your reward will be great, and you will be children of the Most High, because he is kind to the ungrateful and wicked.”
—Luke 6:34-35
(Edit: Disclaimer — Of course, like most Biblical interpretations, the exact these words can definitely be disputed, and even the core meaning can be changed to fit one’s personal or sectarian needs.)
Those who profess to be “Christians” should take note.
Let he who is without sin among you lend the first buck
Michigan is one step closer to needing a bailout for the whole damned state.
Just tell me know how much my share is, so I can start saving for it…
As long as there is a ‘crat in the White House, the taxpayers of America will be drafted to bail out Michigan.
Bailouts, handouts and nationalization have been done before. It will happen again. Precedence set.
Don’t worry. Be happy.