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Your money or your life!

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Contributed by: SM Merchant on 1/3/2007

"Mom, those guys are robbing that bank," Victor shouted. I was driving down Wadsworth with my kids talking a mile a minute in the back seat.

I didn't pay attention to their escalated chatter because, really, what were the odds that a bank robbery was taking place in broad daylight?

How would my kids even know what a bank robber looked like? I had never seen one. They persisted, until I finally turned in the direction they were pointing.

Sure enough, three men were entering the bank, pulling masks over their faces. I knew what they were going to do. I pulled into the parking lot adjacent to the bank and dialed 911.

"Three men are robbing the bank," I exclaimed. They responded, "Hold, please."

I was perplexed. I couldn't understand why no one was taking me seriously. But I hadn't taken my kids seriously five minutes earlier, either. Why should the 911 operator take me seriously?

The same concern that I had about the bank being robbed is affecting me today as I drive around my city. Business that burden consumers with perpetual debt are springing up on every corner with more frequency than Starbucks.

I'm referring to the payday loan offices, rent-to-own stores and pawn shop operations that are growing at the alarming rate of 150 percent per year nationwide.

I want to run up and down in front of their stores with a sandwich board that says, "You are being robbed!"

Investigative by nature, I visited a payday loan shop, where I found that I could get $300 in cash by writing two post-dated checks.

The clerk informed me that the annual percentage rate was 521.9 percent! But he assured me that this wasn't as bad as it sounded, because it was only a 14 to 28 day loan. He also neglected to tell me that his average customer has 13 loans.

After 14 days my checks would be cashed, and if they bounced, there would be additional charges and I would be turned over to their collection agency. Talk about easy money--FOR THEM!
Legal loan sharking like this could have spared the 1930s bank robber, J ohn Dillinger, a life behind bars.

Next, I stopped in to a pawn shop where I was offered $425 in cash for a ring purchased 14 years ago at the price of $2,500. I wold pay them $42.50 a month, only 10 percent interest, excuse me, but my math says it's 120 percent.

If they didn't hear from me in 90 days, the ring would be theirs. However, as long as I kept paying the $42.50 every month I could get my ring back. Sorry, but no deal.

The last stop was a rent-to-own store. Here, I could buy a used Whirlpool washing machine for $965.31 by paying 13.99 weekly for 69 weeks. I did have the option of purchasing a new machine for $1,273 with an extended pay period of 97 weeks.

The same washer retailed new at the appliance store for $399.

I wanted to say that if I could sell my used washer for $1,000, they could have it that afternoon and I would throw in dinner for two, a dozen red roses plus baby-sitting.
Naive and credit/cash strapped consumers need to be informed about such exploitation.

Sadly, businesses that walk on the backs of the consumer are often publicly traded.

They are included in the portfolios of pension and mutual funds, and they are owned or invested in by banks and insurance companies.

B.C. Forbes said, "A shady business never yields a sunny life." It is good to remember that the customers of those businesses fare no better.

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Showing 1-2 of 2 comments

Submitted By: Lawrence Meyers

posted on 1/4/2007 @ 10:00:17 PM

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Here's how it works. In a capitalist society, those seeking long term credit who have collateral get low rates. Short-term credit seekers with no collateral get higher rates. Consumers make a CHOICE, like SM Merchant, whether to take the loan terms as offered. You forget that these businesses experience defaults & have operational expenses. Once you back these expenses out, payday lenders have a 12% net profit margin, pawnshops 17%, and RTO 6%. You THINK consumers who use these products are naive & exploited. Wrong. THEY KNOW EXACTLY WHAT THEY ARE DOING. They respond to the FLAT PRICING, not the APR. They decide if the price they pay is worth the benefit of the product. These businesses are not walking on anybody's back, nor are they "shady". They appear that way to you because you do not understand the economics of credit in our society, freedom of choice, and have likely never been in a position where you need short-term credit. To learn more, visit paydayloanfacts.net

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Submitted By: SM Merchant

posted on 1/4/2007 @ 6:37:18 PM

Rated Blog Entry

WOW!!! I never realized! Ellen Robinson

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CONTRIBUTOR INFORMATION

SM Merchant

Lakewood , CO

SM Merchant has posted 4 blog entries and 2 comments since joining on 2/24/2006. SM Merchant's average blog rating is 5.

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