[Bartweiss]

> What's the alternative? Stop extending credit to risky borrowers? Force lenders to lend to risky borrowers at subsidized rates funded by tax dollars or through coercion?

This seems to be a lot of people's answer. There's this weird claim that payday loans and bad car loans and similar are caused by "greed!" when the companies making them are operating at tiny profit margins. High default rates dictate high prices (which forms a vicious cycle, but that can only be broken from the outside).

The most 'predatory' thing about most bad-credit loans is the fee/repossession system, which tends to be sloppy and abusive because the borrowers are too broke to fight it. Uber has sidestepped that almost completely with a no-consequence termination scheme.

The push to ban or cripple access to low income loans can really only be justified in two ways. One is that these loans are somehow corrupt, but we're not talking about balloon mortgages here - these companies are dealing with principal-agent problems like the home lenders were, and they don't have profit margins to give up. The second is that low-income people are too dumb to make good decisions, so they take these loans. It's a patronizing stance that shouldn't pretend to be uncontroversial.

[bko]

Actually new subprime auto loans install a device that allows the lender to disable and locate the car remotely (obviously not while in use). So repossession is a lot easier (and presumably less sloppy) compared to the alternative and is part of the reason subprime auto rates have fell over the years. Lenders don't want to repossess as they are in the business of charging interest, not in selling pre-owned cars. They only repossess at last resort. Going after missed payments is also very expensive, especially given the small amounts.

[toomuchtodo]

> There's this weird claim that payday loans and bad car loans and similar are caused by "greed!" when the companies making them are operating at tiny profit margins. High default rates dictate high prices (which forms a vicious cycle, but that can only be broken from the outside).

You don't need payday loans when your government provides proper social safety nets, and labor regulations that allow you to earn a living wage.

Payday loans are simply a symptom of the problem.