House of Rothschild
Advance America on Opdyke in Auburn Hills, MIToday I had to go pick up a MoneyGram sent by a friend overseas. Near work I pretty much had three choices: Walmart, Advance America, or any number of gas stations and tobacco shops. Not wanting to walk out of a gas station or tobacco shop with a couple hundred dollars in my pocket, and not wanting to give Walmart any business (I presume they get a slight fee for MoneyGram transactions) I opted to go to the local loan shark, Advance America.
To start, if you don’t know about these places, take a look at Advance America’s Michigan Fee Schedule (PDF) for people who are taking out loans. It ranges from 332.19% APR on a $600 loan to 402.80% APR on a $100 loan. These places are just insane! Or, should I say that using such places is insane. Those fees are absolutely abusive. I’m really surprised it isn’t illegal. Thankfully I have no need to, and wasn’t getting, a loan from there.
Also, I really think (particularly being near Pontiac) that they regularly only see people getting loans, because the woman working behind the counter had no idea how to receive a MoneyGram. While coughing with what she said was a case of “walking pneumonia” she made a total of three calls asking people at other offices how to handle the transaction.
After about 20 minutes she had things sorted out, and I was to receive the money. I’m not sure if this is a special case for Advance America, but I was issued one money order for $100, and a second for the remaining balance. The first money order was then cashed in the office, while I had to take the other with me. As I was going to the bank to deposit everything immediately anyway this wasn’t much of a problem, but it still struck me as a bit odd.
Maybe I should have gone to Walmart instead, but at least now things are sorted out and the monies have been deposited into my account. Yay!
I suspect their client base skews closer to “desperate” than “insane.”
And vulnerable and not financially astute?
The only use I’ve heard for this is if one is going to overdraft a LOT, because the fees are less than overdraft fees would be. Although, I’ve found most banks will work with you on fees if you can get a hold of them ahead of time.
When you need to be able to feed your kids til Friday, or put gas in the car to get to work, sometimes you don’t have a lot of other options.
Is it the best option? No, of course not. But if you don’t have any family you can borrow money from, and you absolutely cannot wait til payday to get some cash for whatever, I can see how it would be tempting.
And $16 to get $100 til payday doesn’t seem that bad when you’re that desperate.
Except the interest rates are high enough that if someone isn’t really responsible after that loan, it could snowball.
I’m not arguing that it’s a good choice; it clearly isn’t.
I’m just saying that I can understand being a position to be tempted to do it.
I can too, but I also think it’s a bit abusive. Those rates are just way, way, way too high.
Kind of reminds me of the old joke that the definition of “lotto” is a tax for people who are bad at math. lol
I think it’s a bad sign of the financial responsibility in our country where places like this can have 300-400% interest rates on pay day type loans and the demand keeps these places well in business even at those interest rates.
Actually the lotto is almost a defacto poor tax.
Totally. I’ve used one exactly once, when I was 19. I had a car payment to make, I was short on it, they wouldn’t take credit, and I wasn’t going to be paid again for five days. On the day I took the loan, I gave them a post-dated check for the day of my next paycheck to cover the amount. When that day came, they cashed it and I never heard from them again.
It’s not ideal, but if you’re young and/or financially screwed enough not to have a lot of options, and you can be sure that you can cover the amount on your next payday so that you don’t have to turn it into a revolving line of credit, it can work out OK.
Unfortunately, I don’t think most people use them this way.
I think that’s my biggest problem… Not that they exist, but that they have positioned themselves (intentionally) to be VERY easy to abuse, and the interest rates put them far outside the category of a reasonable lending institution.
I could maybe, sort-of see needing one, maaaaybe… But to be honest, I also think that one should put a bit aside ahead of time as to not get into those situations. I hope that most people would think ahead like this, but if that were true places like this wouldn’t exist. :(
That’s why you see them more often near Ghetto Fabulous communities like Pontiac, & less in places like Troy or Birmingham.
“It ranges from 332.19% APR on a $600 loan to 402.80% APR on a $100 loan. These places are just insane!”
Heck, I’d think it’d still be pretty bad even if the decimal point had been shifted to the left one place.
You won’t hear me say this about anything, ever… but to be honest I wouldn’t mind if they WERE illegal.
I mean – if the government is going to set a precedent and keep taking my money to step in and help people who are getting themselves into holes (a la Sub-Prime Mortgage madness) I’d prefer they just prevent these people from getting in these situations to begin with.
Apparently some people do need the government to baby-sit them. Ugh.
Not to bait you, but that almost starts going down the path of needing to be better education via better schools… Which there just isn’t funding for. :(
I think places should be able to loan money and charge interest and whatnot, but not at such ridiculous rates.
Funny thing about these places is that they seems to disapear as quickly as they show up. I had a friend who worked at a similar cash advance shop and the amount of people who they had to take to court took them out of business.
Walmart may be evil, but dammit who can resist those low prices?
Those who aren’t willing to sell their future for a few pennies saved on poorly made shit?
But the bargans! Dear god! It’s like an explosion of savings!
Apparently you got the Walmart Consumer’s Guide… “We aren’t evil, the only thing that’s evil is high prices”. ;-) hehe
I am not sure which stuff you specifically talking about though much of the stuff you get at Walmart is the same stuff you buy every where else, only cheaper. Now I am sure the Walmart generic stuff is awful, but when I shop there I only buy the name brand items. Also I haven’t found a place in town to buy older DVDs for so cheap.
Though I have heard some of the anti-Walmart stuff because living in Austin we have many green type folk and very anti-the-man types. Though I thought most of the hate for Walmart was because they use cheap off shore labor and how they treat there employees. In regards to your “Those who aren’t willing to sell their future” comment, what aspect of Walmart am I unaware of that would be selling our future? Not a loaded question, I am honestly curious.
Walmart regularly has custom versions of products / SKUs made up for them, often to the point of demanding that the products be made more cheaply in order to meet price requirements.
Look up info on Snapper pulling out of a deal with Walmart because they refused to make their products cheap enough. Also, this has been done by a number of food and personal product companies, LCD TV manufacturers, etc.
Cool, thanks for the info.
http://www.fastcompany.com/magazine/102/open_snapper.html
Also, Walmart’s insistence on low prices is one of the single largest driving forces behind offshoring production.
The “Race for the Bottom” seems to destroy businesses developed on common sense and cause no end of suffering. The mad dash for cutting prices means that people get lower quality now, rather than having to save to buy a higher quality product a little later. It’s all about laying waste to everything for this years balance sheet, rather than looking at a business five..ten or even fifty years down the line.
Whereas in modern times, you’d think we’d be closing sweatshops and promoting child education and healthcare though both improving automation and an ethical approach, it seems to be going the other way. We now fly stuff across the world in an attempt to make things more cheaply and then fly them back again to sell to an already over consuming public. No wonder our local economy is in such a mess and we have no local manufacturing/production. We’ll be outsourcing governance yet. Pay someone in the far east to run a country over a phone and internet link. They already own our countries though debt and build everything for it. It’s the natural step forward having to having less to do and some guy in a suit picking up a cheque as his share of the work..or not as the case may be.
And “eliminating poverty through making poor people poorer” so they die penniless in a paupers grave? I’d like to see what Charles Dickens would have made of all this..Scrooge II perhaps? The Victorian age never really ended, we just have television and the internet now for advertisments!
That was me again. Sorry. Forgot to log in first!