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Thread: Predatory loan company Spring Financial and Canada Drives

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    Default Predatory loan company Spring Financial and Canada Drives

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

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

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    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.

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    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.
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    Preying on dumbasses is still predatory.

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    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.
    "Masked Bandit is a gateway drug for frugal spending." - Unknown303

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    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

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    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.

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    Quote Originally Posted by Buster View Post
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    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
    "Masked Bandit is a gateway drug for frugal spending." - Unknown303

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    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!
    Quote Originally Posted by killramos View Post
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    You realize you are talking to the guy who made his own furniture out of salad bowls right?

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    Quote Originally Posted by Buster View Post
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    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.

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    Quote Originally Posted by Super_Geo View Post
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    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?

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    Quote Originally Posted by Buster View Post
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    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
    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/

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    Quote Originally Posted by Super_Geo View Post
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    Yeah, that is too altruistic for me to commit my life to
    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....

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    Quote Originally Posted by Buster View Post
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    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.

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

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    Quote Originally Posted by Buster View Post
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    Safeguards like, say, putting what they are doing clearly on page 1 of the contract?


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

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    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/

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    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?
    Originally posted by Thales of Miletus

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    fact.
    Quote Originally Posted by Yolobimmer View Post
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    guessing who I might be, psychologizing me with your non existent degree.

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    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

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