The previous administration passed regulations requiring payday lenders to verify ability to pay before handing out loans, which was promptly crushed by the current admin at the request of the payday loan lobby.
Another solution is to cap the max interest rate far below current thresholds. The problem with these loans is that lenders are hoping you’ll get into debt, they’re in no way trying to create a mutually beneficial relationship with their borrowers.
If your debt load is unsustainable, such that your interest payments are more than XX% of your income, then you effectively already are bankrupt. We can either try to get people back on their feet, or let their debtors grind them into the dirt for a while longer.
[+] More if they haven't worked it a lot internally or if it is sold while fresh or if you look like someone who is extremely collectible but let's say "Typical case for people who are on verge of bankruptcy" pushes you waaaaay down the stack on all possible ways to price debt.
If you believe the first, like you say you do, people do not need to be protected from themselves, as self-inflicted harm is the correct outcome of letting people do as they please.
I think it’s ok for people who make bad decisions to go deep into debt. There’s no debtors prison in the USA, recourse against default on the extreme low end is pretty minimal. It may stress them out (as unpaid debt should, to some extent) but they likely won’t die over it.
There are tons of better ways of getting people to make better financial decisions than sticking guns in the face of lending institutions that choose to do business with them.
How?
https://politics.stackexchange.com/questions/8793/what-did-j...
There’s no explicit mechanism, but our politicians read this and study it. Academics know, and consider the Constitution an aristocratic document, protecting elite power.
See it’s bailouts and tax cuts for the rich, and inequality, wage stagnation for the masses. The emotional programming for that comes from somewhere.
The laws of physics only dictate who is economically advantaged in that they dictate how our brains work. And our brains are then easily emotionally manipulated into believing bullshit.
But I'm also a personal finance nerd, so eventually I found myself reading https://www.reddit.com/r/personalfinance/
And then I read different versions of the same story over and over and over again. People with far more credit card debt than they could ever pay off. More than a year's salary worth of debt. People that we just stupid about money, and bought way more stuff than they could afford encouraged all the way by the credit card companies and advertising and keeping up with the Joneses.
So now, from time to time, I sometimes find myself wondering if credit cards should just be illegal. Such thoughts are heresy in my own mind, and I don't know how to deal with them really especially because I know that credit cards have been great for me with my 2% cash back and airline points. And I know that they can be great for people who get into a temporary cash crunch and know how to be wise about such things.
But then I read another couple of pages of /r/personalfinance and I wonder again. Maybe people do need protecting from themselves. It certainly looks like some of the people posting there do.
I find myself very sympathetic to the author's views.