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Old 03-27-2013, 20:53   #1
certifiedfunds
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Is this business unethical or immoral?

I have a friend who owns a small mortgage and loan. He loans his own money to people. He charges 34% interest, all secured.

He tells me he has had some customers on his books for 30 years and now loans to their kids and grand kids in some cases.

Everything legal completely legal and formal.

What do you say? Bad guy or providing people with a necessary service?
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Old 03-27-2013, 20:55   #2
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You already know.
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Old 03-27-2013, 21:02   #3
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not a damn thing wrong with it.
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Old 03-27-2013, 21:02   #4
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If you are in such financial dire straights that this is you only way to borrow money-then you are obviously to stupid to realize the nature of this poor decision too. Collateral is a *****, hard to walk away from it even after you realize you no longer own it. Loans secured with a car title--sure you're still driving it, but you are now renting it. Thank God for stupid people, I need to get in on this too-I'm paying for it with my taxes, might as well recoup something.
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Old 03-27-2013, 21:12   #5
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Quote:
Originally Posted by hpracing007 View Post
You already know.
I know what my opinion is. I'm curious to see what others think.
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Old 03-27-2013, 21:15   #6
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I run a business and I have had a lot of success, but I never want to take advantage of people. I believe your friend could charge them higher than the average rate since the risk warrants a higher rate. However, 34% sounds like he is preying on the poor. It may not be illegal, but it doesn't make it ethical.
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Old 03-27-2013, 21:16   #7
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There are usury laws. I'm surprised that such an interest rate is anywhere close to legal. But, hey, I don't need to borrow money. Others do...

California has some laws but they are full of loopholes:
http://oag.ca.gov/consumers/general/usury

Basically, pawn shops can charge whatever they want. Payday loan companies are also charging absurd rates.

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Old 03-27-2013, 21:20   #8
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You have described the Shatmar, Hassidim, Lubovitch, Amish, Romany, Irish Gypsie, Sicilian and Mennonite mortgage industry. Apologies for spelling. HH
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Old 03-27-2013, 21:21   #9
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Quote:
Originally Posted by robbcayman View Post
I run a business and I have had a lot of success, but I never want to take advantage of people. I believe your friend could charge them higher than the average rate since the risk warrants a higher rate. However, 34% sounds like he is preying on the poor. It may not be illegal, but it doesn't make it ethical.
As long as he is disclosing fully he is not taking advantage. There is nothing unethical about it, and in my opinion, people choose to be poor. Poor people borrow money at these terms because they are...well....stupid.

For the record: I have been poor, largely due to my own stupidity. I chose long ago to no longer live that way.
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Old 03-27-2013, 21:21   #10
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Quote:
Originally Posted by robbcayman View Post
I run a business and I have had a lot of success, but I never want to take advantage of people. I believe your friend could charge them higher than the average rate since the risk warrants a higher rate. However, 34% sounds like he is preying on the poor. It may not be illegal, but it doesn't make it ethical.
These are people that obviously need to borrow money or want to borrow money and can't borrow money elsewhere.

He loans everything, basically, at that rate. Meaning, he has no shortage of customers coming in.
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Old 03-27-2013, 21:23   #11
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Quote:
Originally Posted by certifiedfunds View Post
These are people that obviously need to borrow money or want to borrow money and can't borrow money elsewhere.

He loans everything, basically, at that rate. Meaning, he has no shortage of customers coming in.
there has never and will never be a shortage of stupid people in the world.
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Old 03-27-2013, 21:31   #12
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I hope he's better looking than that American Indian babe pushing the 300% APR loans from some reservation on latenight TV. HH
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Old 03-27-2013, 21:32   #13
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Hey it worked for the mob for years.
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Old 03-27-2013, 21:33   #14
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I will say it's a valid and fiscally successful business pursuit.
.
.
.
.
I'll also say I wouldn't want to tell my Grandma that I was doing it.
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Old 03-27-2013, 21:34   #15
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Quote:
Originally Posted by HollowHead View Post
I hope he's better looking than that American Indian babe pushing the 300% APR loans from some reservation on latenight TV. HH
No. He really is an ugly sob.

He doesn't advertise. Not a single bit. His business is all word of mouth.
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Old 03-27-2013, 21:35   #16
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probably depends on which set of ethics or morals he ascribes to...
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Old 03-27-2013, 21:35   #17
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So let me ask this: If he wasn't there to make the loans, what would these people do?
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Old 03-27-2013, 21:40   #18
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They would hit bottom and claw their way out, hopefully to the top of the heap.

Or turn to crime. It depends on the neighborhood.
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Old 03-27-2013, 21:43   #19
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The usury business is not unethical due to the losses incurred lending to risky borrowers.

If 34% is too much, maybe a competitor can loan at 30%...or maybe the risk is too great.
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Old 03-27-2013, 21:43   #20
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Quote:
Originally Posted by gjk5 View Post
As long as he is disclosing fully he is not taking advantage. There is nothing unethical about it, and in my opinion, people choose to be poor. Poor people borrow money at these terms because they are...well....stupid.

For the record: I have been poor, largely due to my own stupidity. I chose long ago to no longer live that way.
It was mentioned earlier most states have usury laws to protect people for predatory lending. Some people aren't educated about finances, but that doesn't make it moral to take advantage of their lack of education or ability to seek traditional loans.
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Old 03-27-2013, 21:45   #21
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Quote:
Originally Posted by certifiedfunds View Post
So let me ask this: If he wasn't there to make the loans, what would these people do?
Go down the street and provide influcks to someone else.
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Old 03-27-2013, 21:46   #22
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Quote:
Originally Posted by certifiedfunds View Post
So let me ask this: If he wasn't there to make the loans, what would these people do?
Be four years too late for the subprime lending fiasco. HH
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Old 03-27-2013, 21:47   #23
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Quote:
Originally Posted by Flying-Dutchman View Post
The usury business is not unethical due to the losses incurred lending to risky borrowers.

If 34% is too much, maybe a competitor can loan at 30%...or maybe the risk is too great.
He literally started off lending his own cash. He lived very, very frugally for decades while he let his money grow to a critical mass.

I wonder if any of the folks here are interested in starting a business lending their own money to people with no or lousy credit at 6%? They would crush him.
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Old 03-27-2013, 21:49   #24
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Quote:
Originally Posted by robbcayman View Post
It was mentioned earlier most states have usury laws to protect people for predatory lending. Some people aren't educated about finances, but that doesn't make it moral to take advantage of their lack of education or ability to seek traditional loans.
How is this predatory lending?

1. They come to him. Again and again in many cases.

2. He doesn't want to repo their property. He really, really doesn't.
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Old 03-27-2013, 21:49   #25
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Quote:
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Go down the street and provide influcks to someone else.
I ****ing can't stop laughing
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