<instructions>Your goal is to analyze the following comment and estimate how highly it will be upvoted by the Hacker News community.</instructions><comment><author>rayiner</author><text>And Facebook and Google want to get you locked in a cycle of mindless browsing and ad consumption. The difference is that Facebook and Google operate in markets with high barriers to entry resulting in fat profit margins. Payday lenders, by contrast, operate in a market with immense amounts of competition. There’s one on every block in most places.&lt;p&gt;Payday lenders don’t lock people in cycles of debt. What looks people in cycles of debt is that their income levels are marginal so any unexpected event can totally derail them.&lt;p&gt;I have a paid off car. When I got into a fender bender, I needed to pay $2,500 out of pocket to fix it because I don’t carry insurance for damage to my own vehicle. If I was poor, what would I do? I can go to a payday lender, who has to charge high fees because poor people are high risk. I’m caught in a cycle of debt—because I couldn’t afford that expense to begin with. But at least I can get around. If you take away that option, I don’t get my car fixed and lose my job. That’s the alternative.</text><parent_chain><item><author>CydeWeys</author><text>Payday lenders are predatory.  They want to get people locked into a cycle of debt, so that they can charge many times the original amount in interest per &lt;i&gt;year&lt;/i&gt;.  I&amp;#x27;m surprised to see anyone defending them.</text></item><item><author>rayiner</author><text>The rules were misconceived to begin with, by people who mistook the symptoms for the problem. There is a ton of competition in payday lending—there is zero reason to believe that payday lending rates are higher than the efficient amount. There is no hint of market failure, systemic risk, or any of the other criteria that typically justify regulating financial institutions.&lt;p&gt;That means this rule wasn’t really a &lt;i&gt;consumer protection regulation&lt;/i&gt; but rather a &lt;i&gt;moral regulation&lt;/i&gt;. It’s not in the vein of Dodd-Frank, but rather blue laws and the prohibition on buying cooked food with food stamps. People don’t like the moral implications of what it means to be poor, so they try to legislate the symptoms. The result is denying poor people access to credit.&lt;p&gt;EDIT: I see people hand waving about fraud and hidden fees and lack of transparency. But if you look at the rules, they don’t address such things: &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;www.consumerfinance.gov&amp;#x2F;about-us&amp;#x2F;newsroom&amp;#x2F;cfpb-finalizes-rule-stop-payday-debt-traps&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;www.consumerfinance.gov&amp;#x2F;about-us&amp;#x2F;newsroom&amp;#x2F;cfpb-final...&lt;/a&gt;. They are restrictions on who can borrow and how much.</text></item></parent_chain></comment><story><title>Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending</title><url>https://www.npr.org/2019/02/06/691944789/consumer-protection-bureau-aims-to-roll-back-rules-for-payday-lending</url></story>
<instructions>Your goal is to analyze the following comment and estimate how highly it will be upvoted by the Hacker News community.</instructions><comment><author>thaumaturgy</author><text>&amp;gt; Payday lenders have low losses and high profits (34%+ return on investment)&lt;p&gt;&amp;gt; A payday lender would have to work hard to lose money, even though borrowers are generally low-income and have weak credit histories. Holding a &amp;quot;live&amp;quot; check as security gives a lender strong collateral and leverage over a borrower who, when faced with the threat of criminal prosecution and penalty fees, will keep paying renewal fees every two weeks when they cannot afford to repay the loan in full and walk away. With these renewals (or loan flips), they are never paying down the principal owed. In North Carolina in 2000, for example, only 6% of payday checks were returned for insufficient funds (NSF) and lenders recovered about 69% of the value on these. They also collected $2 million in NSF fees.&lt;p&gt;&amp;gt; In comparison, the credit card default rate, like the payday default rate, is also approximately 6% -- but the interest rate on a credit card rarely exceeds 29% (as opposed to payday loans that routinely charge 400% APR or more). Personal loans and car loans have default rates of around 2%, with APRs between 5 and 15%. Compared to other forms of credit, the exorbitantly high APR charged on payday loans is drastically out of proportion with the relatively normal risk involved in making those loans.&lt;p&gt;&lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;www.responsiblelending.org&amp;#x2F;research-publication&amp;#x2F;fact-v-fiction-truth-about-payday-lending-industry-claims#five&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;www.responsiblelending.org&amp;#x2F;research-publication&amp;#x2F;fact...&lt;/a&gt;&lt;p&gt;The whole page is worth reading.</text><parent_chain><item><author>CydeWeys</author><text>Payday lenders are predatory.  They want to get people locked into a cycle of debt, so that they can charge many times the original amount in interest per &lt;i&gt;year&lt;/i&gt;.  I&amp;#x27;m surprised to see anyone defending them.</text></item><item><author>rayiner</author><text>The rules were misconceived to begin with, by people who mistook the symptoms for the problem. There is a ton of competition in payday lending—there is zero reason to believe that payday lending rates are higher than the efficient amount. There is no hint of market failure, systemic risk, or any of the other criteria that typically justify regulating financial institutions.&lt;p&gt;That means this rule wasn’t really a &lt;i&gt;consumer protection regulation&lt;/i&gt; but rather a &lt;i&gt;moral regulation&lt;/i&gt;. It’s not in the vein of Dodd-Frank, but rather blue laws and the prohibition on buying cooked food with food stamps. People don’t like the moral implications of what it means to be poor, so they try to legislate the symptoms. The result is denying poor people access to credit.&lt;p&gt;EDIT: I see people hand waving about fraud and hidden fees and lack of transparency. But if you look at the rules, they don’t address such things: &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;www.consumerfinance.gov&amp;#x2F;about-us&amp;#x2F;newsroom&amp;#x2F;cfpb-finalizes-rule-stop-payday-debt-traps&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;www.consumerfinance.gov&amp;#x2F;about-us&amp;#x2F;newsroom&amp;#x2F;cfpb-final...&lt;/a&gt;. They are restrictions on who can borrow and how much.</text></item></parent_chain></comment><story><title>Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending</title><url>https://www.npr.org/2019/02/06/691944789/consumer-protection-bureau-aims-to-roll-back-rules-for-payday-lending</url></story>