Predatory loan company Spring Financial and Canada Drives

[Super_Geo]

Pay $4,300, get $1,750 back after 3 years. One man’s cautionary tale about ‘savings loans’
https://globalnews.ca/news/6228663/savings-loans-credit-repair-loans-canada/



Cody O’Day wanted to borrow money to buy furniture to set up an Airbnb. Instead, he ended up with a loan contract stipulating he would have to pay nearly $4,300 in order to receive $1,750 only after three years.

O’Day signed up for what some call a “credit-repair loan” or “secured savings loan,” in which borrowers receive no money upfront but must make regular payments. Lenders usually release funds either at the end of the loan period or gradually, as they receive deposits.

What kind of ridiculous shit is this?!
You're paying them fees and interest on money you give to them, only to get about 1/3 of your money back at the end of it all?
How is predatory shit like this tolerated in Canada?

Makes my blood boil... is there a way for a mob of Beyonders to take them down? :devil:

[370Z]

Good thing we live in Alberta and the NDP did something about this a few years ago.

[88CRX]

Yea that sucks, how does it make any sense? (Edit: so its a made up loan to build up your credit but to get the loan you have to front the money, crazy)

But you have to read what you sign!


The loan contract seen by Global News clearly states on the first page “you will not get access to any money upfront.” But O’Day said he signed it without reading it while on lunch break at work.

[Buster]

what are you so upset about? The guy is 29 and the agreement was signed between two consenting parties.


The loan contract seen by Global News clearly states on the first page “you will not get access to any money upfront.” But O’Day said he signed it without reading it while on lunch break at work. He also acknowledges the agent who set up the loan on the phone told him he would not receive funds in advance.

88424

[Sentry]

Preying on dumbasses is still predatory.

[Masked Bandit]

I'm going to start off by saying I think consumer debt in general is a cancer on society, and I've said that before but I'm going to look at this from the lender's side just for a moment.

The essence of this arrangement is that someone with horrible credit (let's say a score of 450) can buy a service and have their credit score raised. We don't know just how high at this point but let's assume 100 points. If we view the difference between how much he paid in ($4300) and the amount he got back ($1750) is the cost for him to "buy" a better credit score ($2550 and three years in total). To me, that's a high price and an inefficient method to improve one's credit score but it may very well accomplish just that. If he just left $4300 in his savings account he wouldn't have an improved credit score so he took a different path (again, not the one I would have chosen) but he did in theory get the product he wanted to purchase, a better credit score.

[ercchry]

39% APR isn’t all that crazy when talking about people that are that bad with money that they sign shit without reading or grasping the concept of the contract

Fees are pretty standard in the lending world, and 17% interest is less than most CC

[Buster]

I think OP should start a consumer lending company. The market for low interest rate loans to deadbeat losers that can't wash their hair or read basic shit is wide open.

[Masked Bandit]

I think OP should start a consumer lending company. The market for low interest rate loans to deadbeat losers that can't wash their hair or read basic shit is wide open.

#bustershouldinvestinthat

[ExtraSlow]

Probably we could have the federal government step in and create a system of low-interest loans to people with poor credit. That would help people get back on thier feet and stimulate the economy. It would probably be wildly profitable too, thus contributing to the government finances. It's a perfect solution with zero downsides!

[Super_Geo]

I think OP should start a consumer lending company. The market for low interest rate loans to deadbeat losers that can't wash their hair or read basic shit is wide open.

What part about this is a loan? Did you pay any attention to the article aside from the part where you thought the guy is a deadbeat loser? It's a negative interest rate instrument with long lockups and high fees. Regardless of what you think of the people who get caught by these scams and whether or not their life choices are worthy of your empathy, these predatory companies don't do anything to better society. They increase financial burden on the poor and siphon money to some morally compromised douchebags.

[Buster]

What part about this is a loan? Did you pay any attention to the article aside from the part where you thought the guy is a deadbeat loser? It's a negative interest rate instrument with long lockups and high fees. Regardless of what you think of the people who get caught by these scams and whether or not their life choices are worthy of your empathy, these predatory companies don't do anything to better society. They increase financial burden on the poor and siphon money to some morally compromised douchebags.

Like I said - you have an opportunity here. Start a firm that lends money to these people. Charge low interest rates. Ignore their previous credit history.

Blog it, so we can see how things go. What could possibly go wrong?

[Super_Geo]

Like I said - you have an opportunity here. Start a firm that lends money to these people. Charge low interest rates. Ignore their previous credit history.

Blog it, so we can see how things go. What could possibly go wrong?

Yeah, that is too altruistic for me to commit my life to :rofl:
I did take part in a seed round for a startup that does exactly that though. They are tackling predatory payday lenders, growing fast, and doing a great job managing risk.
https://zayzoon.com/

[Buster]

Yeah, that is too altruistic for me to commit my life to :rofl:
I did take part in a seed round for a startup that does exactly that though. They are tackling predatory payday lenders, growing fast, and doing a great job managing risk.
https://zayzoon.com/

The product in the original article wasn't designed to create liquidity. Never was. It is a fee masquerading as a loan payment so that you can get a provable payment stream to Credit agencies. Numbnuts in the original article didn't know what he was buying. I think your bigger complaint is actually that you don't believe that people have agency and should not have to learn personal responsibility. And if they don't, it's everyone else's fault. So I say to Mr. No-Shampoo: "act like the adult you are". Instead, your approach is to infantilize people and tell them they don't have to think or take responsibility. Which appears less respectful?

Zayzoon is just a personal micro-factoring setup. Managing risk is easy there because the counter-party isn't the consumer, it's the payroll source. You cost of funds is pretty low when your contract is with McDonalds or some shit. I would be interested to see how much of the fee they kick back to the employer. Ask the management THAT question, next time you're at an investor meeting, and see if the answer gives you the warm and fuzzies. McDonald's using a third party "lender" to skim a few bips off of employee wages....

[Super_Geo]

The product in the original article wasn't designed to create liquidity. Never was. It is a fee masquerading as a loan payment so that you can get a provable payment stream to Credit agencies. Numbnuts in the original article didn't know what he was buying. I think your bigger complaint is actually that you don't believe that people have agency and should not have to learn personal responsibility. And if they don't, it's everyone else's fault. So I say to Mr. No-Shampoo: "act like the adult you are". Instead, your approach is to infantilize people and tell them they don't have to think or take responsibility. Which appears less respectful?

I spent almost a decade structuring and trading financial instruments, both sell side and buy side. While on the sell side, I had a lot more knowledge than the client (typically oil producers), and even though you could reasonably claim that it's a transaction between two consenting corporations savvy enough to fend for themselves, you can't go around running over your clients to make a quick buck. I mean, sure it happens, but if it's too egregious the regulators will get involved.

Anyway, the same protections exists in the consumer space, it's just a question of whether or not they skin their victims so loudly that the regulators take notice and make legislation to reign them in. The asymmetry of knowledge is orders of magnitude bigger than in the b2b world, and the personal fallout too.

To your comment: It's obviously not 'everyone else's fault'-- it's solely the fault of the predatory lenders. As long as we let them freely operate (and especially with how easy it is to hypertarget people with ads these days) there will always be a certain segment of the population that gets caught in their bullshit. On that point, I think it's better to have safeguards in place for people who are vulnerable to those schemes, and you seem to think otherwise. Each to their own, I suppose.

[Buster]

Safeguards like, say, putting what they are doing clearly on page 1 of the contract?

[bjstare]

Safeguards like, say, putting what they are doing clearly on page 1 of the contract?

:rofl:

must spread some rep before I can give it to Buster again.

[Super_Geo]

Buster, I'm not sure why you're so set on defending these shit stains. Read their website. If you agree with them, great. If you don't, great.
Feels like we are arguing two different things, not sure our respective keyboard warrioring will turn the other over.
https://www.springfinancial.ca/

[killramos]

The problem I see with cracking down on “predatory lending” is you are just taking away the option from people to borrow money who no one else would otherwise touch with a 100 foot pole. It’s not a great situation but it’s just fact, there aren’t enough adjectives in the dictionary to describe how risky lending to these people is, lenders get to demand massive “predatory” premiums to touch this business.

If people think giving up a few thousand bucks is worth a 100 point boost in their transunion score who am I to say they can’t do that.

So say you shut down these high yield loaning “predatory” practices. Now what? These people now have no options to gain some short term liquidity for whatever reason they need it. Would we prefer they turn to crime instead?

[ercchry]

We have legislation for maximum APR on loans, this case is well below that threshold. The existence of a product does not make it inherently “predatory”. Misleading someone into a product that is not a good fit and puts them into a worse situation than they currently are in is what’s predatory.

I personally don’t think a product like this is as awful as you’re making it out to be. The bigger concern to me would be the “debt consolidation” companies out there that prey on the fiscally illiterate by putting them into consumer proposals to payoff small sums that could easily be structured into a new loan, and often a secured loan as I often come across people that had positive net worth that still get taken advantage of by these companies. Claiming they are “protecting their largest asset” (house) where in reality they are completely butt fucking their credit so they are. Minimum two years out from reestablishing their credit to a point where they can qualify for an A mortgage again

[Buster]

Buster, I'm not sure why you're so set on defending these shit stains. Read their website. If you agree with them, great. If you don't, great.
Feels like we are arguing two different things, not sure our respective keyboard warrioring will turn the other over.
https://www.springfinancial.ca/



No, I think we are getting to the crux of our disagreement.

You seem to be arguing that society needs to be able to save people from themselves.

I'm arguing that the cost to that approach is high and negatively impacts society. I prefer to live in a world where two consenting adults are allowed to exchange freely between themselves without governments telling them what they can or cannot do. Freedom of association thing. I'm also arguing that if we start devaluing written contracts by making them pass some sort of warm and fuzzy test AFTER they are signed, then people will start losing faith in signing contracts. That also hurts everyone.

You can't argue for the benefit of having rights and freedoms, but then restrict those freedoms when people are using them in ways you don't like.

[TomcoPDR]

So say you shut down these high yield loaning “predatory” practices. Now what? These people now have no options to gain some short term liquidity for whatever reason they need it. Would we prefer they turn to crime instead?

They’ll seek from family and friends at zero interest... what’s the worse that could happen.

[killramos]

They’ll seek from family and friends at zero interest... what’s the worse that could happen.

Sounds exactly like my crime route :rofl:

[Super_Geo]

We have legislation for maximum APR on loans, this case is well below that threshold. The existence of a product does not make it inherently “predatory”. Misleading someone into a product that is not a good fit and puts them into a worse situation than they currently are in is what’s predatory.

Even in this thread, so many people have made mention of APR, loans, etc...
This isn't a loan, and comparing it to a loan, using terms that are usually associated with loans, etc, is all part of what makes this a predatory product.

This is a negative interest holding instrument with absurdly high fees on top.
There's no credit risk on their end, risk of default, etc... they aren't giving you any money! They're taking your money, and then at some point they'll give about 1/3 of it.

Oh, and if you miss a 'payment'...


What happens if I miss a payment?
If you miss a payment you will fall behind on your loan. Each missed payment incurs an NSF fee of $30. If you think you are going to miss an upcoming payment please reach out to our Client Care team in advance of your payment date and they can review your options with you.

I can't see this as anything other than predatory as hell...

[ercchry]

Well if you’re not goi to comprehend the posts I’m not going to bother typing them. APR still applies in this case, it’s still a financial product and funds are being exchanged. Can’t wait to hear your thoughts on reverse mortgages

[Super_Geo]

No, I think we are getting to the crux of our disagreement.

You seem to be arguing that society needs to be able to save people from themselves.

Yes. Society does, and has. Can't market cigarettes to kids, have to clearly put warning labels on the packages to adults who already know the cause cancer.
It usually (but not always) revolves around asymmetry of power or knowledge.

To my point above, I can't go around marketing an exotic option structure to a Calgary energy company without disclosing how it might blow up in their face, even though they are a savvy business and they should know better.
And my analog here is: companies shouldn't market a product that is inherently confusing (maybe not to you, me and people in this thread, but even still.... look at all the mentions of loans, APR, etc, in this thread alone... APR? for this thing?!) to a client base that isn't savvy to know what it is.


I prefer to live in a world where two consenting adults are allowed to exchange freely between themselves without governments telling them what they can or cannot do. Freedom of association thing. I'm also arguing that if we start devaluing written contracts by making them pass some sort of warm and fuzzy test AFTER they are signed, then people will start losing faith in signing contracts. That also hurts everyone.

You can't argue for the benefit of having rights and freedoms, but then restrict those freedoms when people are using them in ways you don't like.

Contracts that are not created on equal footing, where there is a large asymmetry of power where the advantaged side is taking advantage of their counterpart, have been legally challenged countless times before you and I have been around, and I would argue that society comes out stronger for it.

It's why airliners need to quote pricing that includes taxes and fees, and has a 24hr cool off period, etc. I think those are all good rules, and helps the functioning of society, and doesn't impair the capability of the airliners to run their business.

[Buster]

Even in this thread, so many people have made mention of APR, loans, etc...
This isn't a loan, and comparing it to a loan, using terms that are usually associated with loans, etc, is all part of what makes this a predatory product.

This is a negative interest holding instrument with absurdly high fees on top.
There's no credit risk on their end, risk of default, etc... they aren't giving you any money! They're taking your money, and then at some point they'll give about 1/3 of it.

Oh, and if you miss a 'payment'...


I can't see this as anything other than predatory as hell...

What you are describing isn't a bug, it's a feature. The entire point of the product is that the FI writing the p-note takes on no risk. They are simply reporting a payment stream to the ratings agencies, and collecting a fee for the service. I have no interest in descriptions like "absurd". If you don't like it, start one of these companies up and charge a lower fee.

This is a niche thing designed for a specific purpose. The idiot in the article bought a hammer and complained when it didn't operate like a drill.

In either case, it shouldn't prevent that notion that an adult should have the right to sign a contract, and then be held to that contract.

[Buster]

Contracts that are not created on equal footing, where there is a large asymmetry of power where the advantaged side is taking advantage of their counterpart, have been legally challenged countless times before you and I have been around, and I would argue that society comes out stronger for it.



A good way to combat asymmetry of information is to put on the contract, on page 1, what you are signing.

As for asymmetry of power - nothing wrong with that, it's how people generate profits. You need something, someone else has it, so you must pay a margin to get it.

[ExtraSlow]

What did the guy in the story THINK he was buying? Most of us have been assuming he was trucked somehow, but was he? Or did he get exactly what he was seeking?

[Super_Geo]

APR still applies in this case, it’s still a financial product and funds are being exchanged. Can’t wait to hear your thoughts on reverse mortgages

Sure, if APR is the right term to use, what is the APR on a product that gets you $1750 at the end of 3 years, during which you've put in $4300?
My point is just that using terms like APR/loans confuses the issue.
Cause you know what ends up with 1750 after putting in 120/m for 3 years? A -73.8% 'savings' account.

[Buster]

Sure, if APR is the right term to use, what is the APR on a product that gets you $1750 at the end of 3 years, during which you've put in $4300?
My point is just that using terms like APR/loans confuses the issue.
Cause you know what ends up with 1750 after putting in 120/m for 3 years? A -73.8% 'savings' account.

that's a weird way to look at it, but okay.

[ExtraSlow]

Okay, it's not a loan, and it's not a savings account.

[S-FLY]

This whole thread is like trying to argue with a millennial about why they're offended by the color green.

[Xtrema]

So if I read this correctly.... this is just a spin on whole life insurance. Where one cover the cost of life insurance, and the other repair credit scores.

Given the guy wants a loan to engage his AirBnb business, I have less sympathy than those payday loan scams. He just got a very expensive business lesson. It's no different than those infield developer that ran out of credit and had to run to private lenders for higher rate loans.

It's how the market works, the less likely they can collect, the more expensive the loan is.


That said, I'm waiting UCP to reverse NDP's predatory loan law because industry helped out
https://www.cbc.ca/news/canada/calgary/cashco-election-advertising-1.5086292

[M.alex]

I don't see the issue or need for mob justice.

If you can't figure out the + and -s associated with a financial transaction that's your own fault.

[ExtraSlow]

I don't see the issue or need for mob justice.

If you can't figure out the + and -s associated with a financial transaction that's your own fault.

Or if you can't carve out enough time to make this decision somewhere where you can hear the other party clearly AND won't feel rushed.

[Rocket1k78]

What did the guy in the story THINK he was buying? Most of us have been assuming he was trucked somehow, but was he? Or did he get exactly what he was seeking?


Or if you can't carve out enough time to make this decision somewhere where you can hear the other party clearly AND won't feel rushed.
No shit! This is 100% the guys fault, you go and sign financial papers without reading what you're signing and then blame you not being able to understand the call because it was noisy on your end?!!?! This is the big problem with our society now, if you dont like what you signed up for even though its super clear and in writing you cry to the media and they will bail you out. Fuckin BS