Why are outrageously high interest rates allowed on loans in the US? Please see details.?

The reason given me was that higher interest was because of a lack of credit. Which doesn't make a whole lot of sense, but that's what GMAC told me when I lost my temper in the finance office of a GM dealership.

I think the legality of it comes from the donations made through lobbyists for politicians to not notice legalized extortion.

And if you really want legal extortion, deal with an attorney. I recieved a traffic ticket some years ago, and paid it in person, at the local JP's office. The fine was $180. I started getting particularly threatening letters from a law firm in San Antonio. They wanted $270 for representing me, puzzled the hell out of me. With interest, that's now reached about $500, for work that was niether done nor solicited. Worse, they keep mailing the bill to my parents, which gets me a call to come and do something about it. If you want to hear a shriek, run it through the shredder without looking at it in front of my mother. I take them home to shred them now. I'd sue them, but I can't find an attorney that will sue another attorney.

D

There are limits to how much they can charge called usury laws, but those limits are set very high--usually around 25% for a non-default rate and higher for a default rate. A relatively normal loan will also seem outrageous--without pulling out a calculator I think that if you bought a $150K house at 3.5% with a 30 year loan you'd pay back well over $300K.

I've never heard of that company, but there are a lot of people who are 'victims' of shady loans, but I've also heard other people praising the same shady loans. They point out that if you understand the obvious (that this loan will drag you down like an anchor until you pay it off) that they work quite well--I need $600 to fix the car and I won't get paid for two weeks and I'll have at least $400 from that check and maybe the whole $600 to pay off then, and can pay the rest next month. So, for a few penalty and initiation fees someone with no credit cards can get the car fixed and get to work, and pay it all off in a payday or two. Now, if someone borrows more money than they can pay off quickly, or decides that since the minimum payment is $40 that they will just pay that instead of paying everything back right away, then those are the people who wind up paying back five or six times what they borrowed. That's the 'common good' part--there are a few smart people and a lot of dumb people who feel that this should be within their rights to make any financial contract they wish--and a tiny number of people who can fulfill them responsibly, so why take away their right to sign a bad contract?

Since these loans are marketed to people with bad credit, these places are counting on a few things. You will pay their fees because nobody else will loan to you. They expect you to default and begin paying at an even higher interest rate (so if you thought paying back $60K on a $10K loan sounded bad, wait until they say "you're late, now it's $75K (unless you have the ($9,895 balance in full lying around and want to pay it off--oh, we know you don't)". If you put up security such as your car, they are hoping they can repo the car--so then they have the car and you still have the bill.

These guys are crooks, but legal crooks--and the reason they aren't stopped is that we need to draw the line somewhere--in a way every banker is the same kind of crook, just not quite so dirty about it. We could call my bank crooks for charging me almost double what my house costs on a house loan--but if they couldn't get that much they wouldn't loan me the money, and then I couldn't buy a house. This is the same thing that people getting title and payday loans say--If I don't put up my car title, I can't get the car fixed, so I can't get to my job and then I'll really be screwed, so I'll put up the car title, get the car fixed, and hope that my finances are easier to sort out and keep the job. Usually the only time a state passes a law outlawing an interest rate or practice is when we can see from the math that, pretty much no matter what the borrower does, he is signing himself into bankruptcy by taking the loan.

I don't know the legal limit these high risk lenders are actually allowed to charge, but I got myself in quite a pickle. I did one of those quick on line loans for when you are in a big mess. I borrowed $500. I pay $150 each month just in interest. I am told that until I start paying more than that, my principal will not go down at all. Now that is legal loan sharking.

All that matters is the title, not the mortgage repayments. You paid the loan so that you could use the auto, you aren't getting these payments back in any occasion. You each legally own the auto. Have him sign the auto over, take over the financing and take the car. Nice of your ex bf to present.

That sounds pretty ridiculous. It would depend on the minimum payments of the load, an the interest rate. My guess is the terms are repayment of ~ $27.78 a month, and the interest rate is between 20% and 30%.

Most companies are registered in Delaware - and that is for a reason. I think Delaware is one of the few (only?) states that does NOT have a usury (?) law, regarding limiting interest rates.

Loan shark is at the corner.