We are all about partnerships at Momentum. We know that we cannot do everything and that many of the people in our community have knowledge and expertise that we can learn from. It is in the spirit of learning from our community members that we present the following blog post from guest blogger and long-time Momentum volunteer and supporter, Don Thurston. In this post, Don takes inspiration from William Shakespeare’s The Merchant of Venice in looking at payday lending.
Shylock certainly raised the interest rate bar; in the event of default the borrower contracted to pay a pound of his flesh from a location chosen by Shylock. As borrowing costs go, Shylock set the ultimate interest rate.
Debt and the associated costs have long been a part of society. Think of the issues over the centuries; debtors prison when default was punishable by incarceration; neither a borrower nor lender be; if you default on a small debt, that is your problem, if you default on a large debt, that is the lender’s problem; it is amazing how fast later comes when you borrow to buy now; before borrowing from a friend, decide which you need most.
Actions against identifiable groups have influenced money and banking for generations. They gravitated to money lending because of exclusion from many other commercial activities. Some believe that interest is reprehensible and some have no qualms about charging interest at rates beyond the pale.
The most contentious issue surrounding lending is the cost of money levied on the borrower. Many criminal codes define what is deemed to be excessive as usurious. Little has been accomplished except wrangling. Terms and conditions are almost always complicated, contracts are very difficult to understand and enforcement absent only in extreme situations.
There is a social component to lending and attaching hefty costs. Vulnerability is the issue for some of those that need to finance. They are often ill equipped to deal with the consequences’. A lethal combination of a lack of understanding, a shortage of assets and no transparency will lead to unwise borrowing. Agencies rush in to take advantage, charging what many consider unserious rates. Nothing illegal but certainly onerous.
So if you cannot fight them then join them. Recognizing that bridge financing is essential, along comes Cash Crunch. Loans at rates and conditions are now available that beat the competition, give the borrower a fair and reasoned alternative, is totally transparent, makes money for the lender and is convenient. Momentum and First City Financial make up the team to call.
Shylock would have been gob smacked (and out of business).
Like what you read here? Check out Don Thurston’s blog.
If you would like to learn how to manage your money and avoid bankruptcy join us for FREE Money Management workshops on Monday evenings or Tuesday afternoons.
If you are a current or past participant of a Momentum program and you are looking for an alternative to payday loans contact us to learn about the new Cash Crunch Loan.