SuperJail Warden wrote:I think we have a responsibility to protect people from predatory business practices.
Start with auto-lenders and pay day loans.
Payday loans are sometimes the only thing standing between people getting evicted or having their electricity shutoff. Yes, the interest rates are exorbitant, but so are the default rates. We're talking about people that don't have any savings, don't qualify for credit cards, and don't have any family members or friends that will loan to them. The problem is that they are already on the edge and by taking out a loan they are starting the next pay cycle in a hole that is very difficult to climb out of. I've been there. When I was in the army my bank allowed me to overdraft up to $100, so I always started every pay period minus $130 ($30 overdraft fee). When your paycheck is only $450 to begin with, it's really hard to dig yourself out. I did it to myself though, and have no one else to blame. I also had a car loan with a 17% interest rate that soaked up 1/3 of my pay. Tough life lessons, and it's ultimately what led to my interest in economics and finance.
Anyway, if you tried to abolish the payday loans, or the usurious car loans, while the intentions are good, you might end up really hurting the people you're tying to help. Car dealers will disappear and the poor will have a harder time getting to work. When emergencies come up, they might be homeless instead of in debt.