Payday loans: avoid these stocks
If you are in any way a social lender, I would advocate avoiding stocks such as Cash America (CSH).
Here is what the Federal Trade Commission has to say about payday loans: Payday Loans = Costly Cash. No, they are not kidding when they say the APR for payday loans can be 100%, 200%, 300% or so.
Payday loans are a pet peeve of mine, because I see their ill effects on Prosper.com: borrowers live paycheck-to-paycheck, an inevitable life snag occurs, they reach for a single payday loan, and suddenly the interest amounts so quickly you cannot pay it off.
Payday loans also seem to disproportionally affect lower-income people, those who can least afford it.
Labels: CSH, payday loans
3 Comments:
This is also been a peeve of mine. I had to pull the payday loan advertisers from my website ads. More just keep appearing...
Your APR assertions are incorrect. A payday loan fee is typically $15 to $30 per $100 borrowered & is paid back in 14 days. To get the 200%+ APR you quoted in your blog a person would have to make 26 interest only payments every two weeks. Most states (37) do not allow rollovers and none allow more than 4 rollovers. So it is not legally possible to make 26 interest only payments to get cause a 200%+ APR.
Secondly, in the latest Motley Fool commentary, they recommend payday lending stocks.
http://www.fool.com/investing/general/2007/04/20/first-cash-not-subprime.aspx
I hope you are fair handed and will post my comments.
Look at Prosper.com. Sorry souls post real numbers again and again.
Real life disagrees with you.
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