Venn Diagrams For Borrowers

They say a picture is worth a thousand words, so this week I have written up a storm, however, this one has been hanging around in my archives for a while, waiting to come out and state the obvious. I borrowed the idea from a similar diagram comparing a cat and a homeless person.

Pay Day Loans

Similarities Pay Day Loans and Loan Sharks

Anyone care to disagree with this diagram, or did I miss other services made available from both businesses.


In Defense of Pay Day Loans?

One of the contributors to this site is Mrs. C8j, and last week she handed me an article from the Globe and Mail that absolutely flabbergasted her (admittedly Mrs. C8j can actually rant better than I can), written by Sean Silcoff with the title, “Expensive but not excessive: why Pay Day Lenders Aren’t a Rip Off”. Most of my readers know my opinions on these modern-day Loan Sharks, however, if you want to know my opinion read Pay Day Loans the Crack Cocaine of Personal Finances.

After reading the title I figured this was a misdirection story, where if you read the actual article the writer is actually saying the opposite and is attempting to suck you in with an inflammatory title, but I was dismayed to see that this really was not the case. I’d include a link to the article, however it is behind the Globe’s pay wall, and you have to be a Globe Subscriber to read it (click here if you are a Globe Subscriber).

Globe + Mail ?

Globe + Mail ?

The article is actually quite hum drum (not written in my style of ranting like a lunatic in every paragraph), and I kept wondering what tripped Mrs. C8j’s Rant-Fest, and then I read the second to last paragraph, and I must admit my flashing red-light rant-o-meter went off as well.

Given the fact the Globe protects this content with their Pay Wall, I will paraphrase what is said:

BCM thinks it says, “… this is a regulated business that doesn’t make a lot of money because they deal with bad borrowers and thus shouldn’t be viewed with scorn…”

No-Fee Scotiabank Value Visa

The phrase that really caused me to almost choke on my coffee was, “… quick and convenient source of moderate amounts of cash…”. That reads like something out of a Pay Day Loan store’s brochure, “… quick and convenient …”? Those are actually two criteria I always use when choosing a lender, also what kind of hot chicks they have in their ads (since everyone knows that hot chicks dig dudes who use Pay Day Loan services) (for those sarcastically impaired my apologies for me not marking this paragraph as a sarcastic opinion on my part).

The gist of the argument put forward in the article seems to be that because Pay Day Loan companies don’t make a lot of money, thus we shouldn’t view them as a modern-day Shylock (I use that as the vernacular for Loan Shark, not as a derogatory antisemitic term). My opinion is that Pay Day Loan Store Fronts aren’t making a lot of money mostly because there are so damn many of them (in downtown Ottawa, in the core, there is pretty much a pay day loan store front on every block). Yes their customers are folks who may not pay them back, but my guess is they are not making a fortune on their 500% per annum loans due to a glut in the market. There are more pay day loan shops than banks these days, and now with competitors getting rid of their store fronts and running solely as Internet Web Sites, this industry could be ready to make even more money off their customers (following the lead of the Banks and other service industries).

The final paragraph seems to be borrowed from Dr. Henry Morgentaler (or the NRA), in that it is preferable for Pay Day Loan customers to use this legal service, than a more dire choice (i.e. loan sharks). My view of that is: maybe it would be better if we had credit counseling services on every street corner instead? I am not making any statement about Abortions or Gun Control either (let’s deal with one controversial topic at a time).

I honestly don’t understand why the Globe would publish this story, or why it was written, any ideas good reader? What’s next, articles defending the High MERs in Canadian Mutual Funds?


Pay Day Loans are Crack Cocaine of Personal Finances

I said it! I meant it! Pay Day Loans are predatory short term, high interest rate loans designed to entrap their customers in a financial death spiral.

Yup, if you look down the side of this post, you will find ads for Payday Loans, for that I apologize, I need to look into Adsense on how to turn those off, but yes, Pay Day Loans are the Financial Equivalent of Crack to your finances.

I have no idea how Crack feels, and I do not wish to ever learn (I have much the same view on Pay Day Loans too), however, prevailing opinions is that Crack is highly addictive, and it’s high diminishes over time so you have to use it more but you still don’t ever reach that initial high, much like a Pay Day Loan. Pay Day Loans are highly financially addictive, and once you start using them, your financial well-being goes down hill quickly, and they are hard to kick as a habit.

Pay Day loans are modern day loan sharks

Modern Day Loan Sharks

Why am I bitching about this still? Where I live in Ottawa is a relatively affluent area (although it does have a food bank), but it has more than a few Cheque Cashing/Pay Day Loan “stores”. All I can ask is What the Hell is Going on?

Interest rates are ridiculously low and these places are spreading faster than the black death in the middle ages, what happens when interest rates start going up? There are more regulations on these places, but I just don’t understand why there are so damn many of them.

Please feel free to comment on this (any comments about how I am a hypocrite for having ads on my site for these parasites, expect a colourful reply, but take your arguments to Google for allowing them to advertise) topic, and any insight as to why they are multiplying in a Fibonacci sequence would be helpful too.


New Pay Day Loan Rules In Place in Ontario

Glad to see that the Ontario Government has finally taken aim at the modern day version of Loan Sharks and Usury, the “Pay Day Loan” companies that are doing unspeakable financial damage to the working poor.

Specifically the Ontario Government has said:

As of August 1, 2007, Ontario regulations come into force that will
require payday lenders to:

  • Prominently display posters that disclose the cost of borrowing for payday loans
  • Use a standard form and content credit agreement disclosing the details of a borrower’s payday loan and
  • Provide funds to the borrower immediately upon signing their credit agreement.

These measures will improve the consumer’s ability to compare rates prior
to borrowing, fully understand the terms of their loan, and ensure that all
charges are included in the disclosed cost of borrowing.

Good for the Ontario government for doing this, but I think the fact that these companies are allowed to charge what they charge is despicable at best. The Government is also looking for more feedback on what other measures they might need to do, to regulate this industry, maybe licensing these firms would be a good idea (you license banks don’t you)?

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Pay Day Loan Industry in Canada Being Legislated

Well, this is a good thing to see, it seems the Pay Day Loan folks are about to be regulated by the Federal and Provincial governments in Canada, and all I can say, is FINALLY! This will allow the Provincial Governments to set Short Term interest rates, FINALLY! Evidently the usury that the Pay Day Loan folks can charge can be up to and include 1000% (yes 10 times 100%), amazing.

Folks, let me rant for a second, do not use these services, it is such a slippery slope, and once you are in these folks clutches, you have to work MIGHTY hard to get out from under.

A good one from the Government!

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