Report: Cap loan interest rates (for soldiers--36%!)

[TexasLawyer]

How desparate for money must you be to borrow at 36%? And what rate on earth have soldiers been paying if 36% is the CAP?

Navy Times

August 11, 2006

Report: Cap loan interest rates

By Rick Maze
Staff writer

A new Pentagon report endorses the idea of setting a 36-percent maximum interest rate on loans for military members because predatory lenders are targeting young service members and their families.

The Aug. 9 report to Congress, released by Sen. Jim Talent, R-Mo., said the military population has been targeted for high interest rate and high fee loans because its members have steady jobs and bank accounts but are young and inexperienced.

“These borrowers are less likely to weigh the predatory loan against other opportunities and are less likely to be concerned about the consequences of taking the loan,” the report says.

“Predatory products feature high fees/interest rates, with some requiring balloon payments, while others pack excessive charges into the product,” the report says. “The result of their efforts is to obfuscate the comparative cost of their product with other options available to the borrower.”

<snip>

http://www.navytimes.com/story.php?f=1-292925-2017635.php

[WCGreen]

1. Hell, the fucking mob only charged 30%

[bluestateguy]

2. Wartime is not a time for capitalistic bullshit

Lenders should get no more than 3%.

3% no more.

I'm not interested in their profits.

Ah, ah.

Talk to the hand. The face don't want to hear it.

[Sinti]

8. Wars are capitalistic bullshit - what do you think we fight them for?

Our military has and is being used as little more than corporate enforcers. The profiteers are stuffing their pockets so fast some of it's even spilling over into the newspaper... these poor guys caught in the middle (willing to give their lives so you can live yours free and safe, god bless 'em) don't stand a chance.

War Is A Racket

http://www.veteransforpeace.org/war_is_a_racket_033103.htm

[Mind_your_head]

3. Whoa!!! Whoa!!!! Whoa!!!!!

A new Pentagon report endorses the idea of setting a 36-percent maximum interest rate on loans for military members

Gee, how GENEROUS of them to watch out for their fighting men like this. They GUARANTEE that 36% will be the soldiers top rate!!! ~ doesn't that sound GRAND!!!! :sarcasm: :horrified:

[tbyg52]

27. That's probably the amount

Some accountant figured out that would keep them out of bankruptcy yet able to make the minimum payment and in debt forever. That's the goal, isn't it? :sarcasm:

[TexasLawyer]

4. Risk

One really sad thought that I had was about how interest rates generally rise (or collateral demands go up) when the lender faces increased risk of non-payment.

When you loan someone $1000 and he comes home in a box with a flag on top, you aren't going to be collecting on your debt any time soon.

[Mind_your_head]

5. That's sick TX.......it's allllllllllllll about the money to you obviously

spit on the "guy in the box"....HE OWES ME MONEY, DAMMIT!!!!!!!!

[TexasLawyer]

6. wrong

I love soldiers and care about them a LOT!

This is just my sad observation from the world of finance-- the second sentence of my post is what a callous money lender would be thinking as he/she made a loan, to a deploying soldier, with a 50% interest rate or that required his house as collateral.

[Mind_your_head]

7. Where to begin......let's start with "RISK"

The young men & women who go to fight in the military are probably more "idealistically driven" than you and the "moneychangers" are...those folks are risking EVERYTHING, their life, their limbs, the children that they "won't have" b/c they weren't around to help 'create' them, their EXISTING children won't have their love, guidance and financial support once they're 'blown into oblivian, the PARENTS of soldiers won't have the support of their sons/daughters in their old age......you don't think that's RISKY??????

You, and people who think like you, just EXPLOIT people....and you don't even realize what it is that you're asking/HAVING THESE PEOPLE SOLDIERS DO!!!!

You say you 'Love them and care about them'. Really???? How many of your children, nieces, nephews are among them? (I'm serious, I want to know!!!!)

And after ALLLLLLLLLLLLLLll that these soldiers have given/sacrificied, your gonna tell me that a 36% cap is okay?????? You're gonna rape these people ontop of how they've been raped already??? Where's the love, man????? Don't share that kinda 'love' with me, cause I ain't "buyin".....and anyone with an ounce of sense won't either.

g'nite & Goodbye
M_Y_H

[TexasLawyer]

10. I don't think 36% is OK

I think it is highly usurious, and I don't know why this kind of thing is not ALREADY against the law in most or all states. It's shocking, in fact. That's why I posted it. If 36% is the CAP how badly is our military actually being gouged? Really, I think you're misunderstanding or I'm not being clear.

I don't have any relatives in the military but I spent 150 hours last year doing grant writing and legal work for a charity home that supports homeless vets

AND my family and I send a care package every week to a random group of soldiers picked from AnySoldier.com (we've done this for the last year and a half, and we've spent a lot of time and money doing this)

AND I am a member of SoldierAngels where I have "adopted" several soldiers who I write to and send packages to throughout their deployments

AND I keep abreast of military issues so I can write to my congressman about the latest outrages (that's why I was poking around on Navy Times)

AND I'm working really hard for peace.

Speaking of which, peace.

[Mind_your_head]

11. TX, if you're truly a lawyer (as you claim in your name)

Then I will trust that you are working hard to make sure that 36% interest rates are illegal. And if the Pentagon says that "it's okay", than what they say is illegal too.

Principles....they matter. Got Principles???? You already know what's right/wrong. Will you 'stand up for them'????? Ahhhh, that separates the 'mice from men', doesn't it?

I think it is highly usurious, and I don't know why this kind of thing is not ALREADY against the law in most or all states. It's shocking, in fact. That's why I posted it. If 36% is the CAP how badly is our military actually being gouged

Forget the care packages, leave those to us "moms" who will send better ones than you ever will. Spend your time on justice/fairness for those brave souls who (almost) unquestionably will fight for you......cause once they're gone......you're on your own ~ Katrina

[Egnever]

26. Easy killer

TX is on your side here. Telling him to forget the care packages is out of line. This guy is doing a lot to support your "son" and you want to spit in his face.... what is that about?

He never once said the interest rates were fair only pointed out the thinking in financial circles that assigned such rates to these loans based on their perception of risk.

You are shooting the messenger here...with a twelve gage I might add.

[Oversea Visitor]

9. What kind of shit is this

36% on loans.
Talking about milking the poor.

Gee and the billionaires get loan like 4 or 5% to acquire more companies.

SICK SICK SICK

[Vinca]

12. If our soldiers were fairly paid for what they do they wouldn't

need short term loans from usurious outlets to put food on the table.

[TexasLawyer]

24. contractors

I think about the military contractors who go over there and earn double, triple, or way bigger multiples of the salaries of our military men and women. I'm sure a KBR fry cook is making way more than the soldiers.

That's got to be demoralizing. And I've read so many stories of people in the National Guard and Reserves coming back to find that their business is in a shambles, their job has been given to someone else, they have no more health insurance (once they are off active duty), and so on.

No wonder they're borrowing, and no wonder they're sometimes desperate.

[truthisfreedom]

13. recommend, people! recommend!

[Onlooker]

14. Could it be a typo?

Maybe they meant 3.6%.

[Systematic Chaos]

15. Ehm... no

They're talking about "regulating" the payday loan industry and other scum of the earth who offer short-term signature loans or loans against post-dated checks at rates like $20 per $100 per pay period. I've had no choice but to use them once or twice myself and every time I leave one of those places I feel like I'm covered head to toe in rancid shit.

[Onlooker]

16. My god

That's legalized usury. It's really obscene.

[Cobalt Violet]

17. Fighting for the freedoms of loan sharks and price gougers.

How sick.

[elehhhhna]

18. It's PAYDAY/ cash advance loans. The annualized rate? 391%! READ:

A cash advance loan secured by a personal check - such as a payday loan - is very expensive credit. Let's say you write a personal check for $115 to borrow $100 for up to 14 days. The check casher or payday lender agrees to hold the check until your next payday. At that time, depending on the particular plan, the lender deposits the check, you redeem the check by paying the $115 in cash, or you roll-over the check by paying a fee to extend the loan for another two weeks. In this example, the cost of the initial loan is a $15 finance charge and 391 percent APR. If you roll-over the loan three times, the finance charge would climb to $60 to borrow $100.

Much more here:http://www.ftc.gov/bcp/conline/pubs/alerts/pdayalrt.htm

Edit: I piggybacked this & started a thread on cash advance loans--certain there are DUers' who could use a Heads Up on the subject.
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=364&topic_id=1894527&mesg_id=1894527

[TexasLawyer]

25. You're right--

There was more on this at the end of the article. And I didn't realize how the military was particularly targeted by these lenders:

<snip>

Predatory lenders some in many varieties, from payday loan operations to advanced refund operations and even Internet-based lenders, the Defense Department report says. One thing they have in common is targeting people based on their guaranteed continued income rather than the ability to repay the loan, which is one of the reasons why those getting the loans have trouble paying them off, the report says.

In fact, defense officials said the inability to pay back a loan in full is part of the business model for loans targeting service members because this means more fees can be charged when the loan is refinanced.

Interest-rate limits generally are set by states, not the federal government, but the Pentagon report said this works against service members. “Predatory lenders attempt to work outside of established usury limits, either by attempting to obtain exemptions from federal and state statutes or by developing schemes designed to circumvent existing laws,” the report says.

[lebkuchen]

19. Those loan sharks are just beyond the gates of most US bases

Their businesses are draped in flags.

The typical American has, on average, $9,000 worth of charges on the credit card. The military family must make up a large bulk of that group.

[PassingFair]

22. These loan sharks are on nearly EVERY BLOCK here in

...Michigan.

I have a couple of them as customers. Most are "franchise" owners.
They are ordinary people, nice people, but I don't like calling on
them because I have to observe their customers getting screwed.

Every time I leave a "PayDay Advance" store, I am SO glad that I
am not caught in the terrible cycle that these people find them-
selves in.

That said, I see the look of relief on their faces as they are
walking out the door with cash they need to survive another day
in this whack economy here.....

[Caria]

20. When DID loansharking become legal?

I really want to know.

Yes, I think by setting the cap at 36%, the government is (1) acknowledging that they are sending these people off to to be maimed or killed, and (2) showing yet again that they care about profits, not people.

[Gregorian]

21. It's like usery without the extra paperwork.

Come on. What's the difference? At some point, like say 391% APR, it becomes a minor difference.

[Gman]

23. Gee, how thoughtful of them

Courtesy of the same lobbyists that wrote the bankruptcy legislation.