Movie: Maxed Out

[FidelCashflow]

Originally Posted by arced

I guess Scurlock's reaction would be that these cc companies are targeting people who are 'risky, knowing that a certain percentage will fall behind and get screwed. '

Everyone seems to think this line of thinking is so revolutionary. It's basic finance, higher risk investments must attract higher rates of return on average to attract investors. It sounds evil the way scurlock presents it, and the way their marketing tactics are questionable, but high risk investments have their place in any investment portfolio, even loaning money to high risk creditors who have high rates of defaulting. These cc companies are basically trying to keep customers in a zone somewhere between bankruptcy and paying off their balance in full at the end of the month.

What's really evil is some businesses who are actually depending on customers going into bankruptcy and are really interested in repossessing property, not collecting on cash owed. These shady companies purposely make the absolute minimum attempt to collect before they start re-po'ing stuff. I've heard of some rent-to-own places doing this. They "rent" out a ton of furniture to someone who really can't afford it in the first place and doesn't understand all the finance lingo thrown at them about rates and what-not. They purposely look for the most shaky customers they can find. Once they give the person enough rope to hang themselves with, they make an absolute minimum attempt to collect (1 call and that's all), then they send someone to re'po the furniture, as well as a bunch of other stuff to make up for all the crazy hidden fees and interest. Lots of what they seize goes back into inventory to rent out to their next victim. The remainder gets liquidated for their profit. If they can scare some cash out of people for hidden fees and take back the item, it's a double-win for them. These companies often expect to repossess the same item 10-20 times before anyone actually successfully buys it at an outrageous price after all the hidden fees and interest. That's why the call them "rent-to-own."

 

[arced]

Originally Posted by FidelCashflow

Everyone seems to think this line of thinking is so revolutionary. It's basic finance, higher risk investments must attract higher rates of return on average to attract investors. It sounds evil the way scurlock presents it, and the way their marketing tactics are questionable, but high risk investments have their place in any investment portfolio, even loaning money to high risk creditors who have high rates of defaulting. These cc companies are basically trying to keep customers in a zone somewhere between bankruptcy and paying off their balance in full at the end of the month.

What's really evil is some businesses who are actually depending on customers going into bankruptcy and are really interested in repossessing property, not collecting on cash owed. These shady companies purposely make the absolute minimum attempt to collect before they start re-po'ing stuff. I've heard of some rent-to-own places doing this. They "rent" out a ton of furniture to someone who really can't afford it in the first place and doesn't understand all the finance lingo thrown at them about rates and what-not. They purposely look for the most shaky customers they can find. Once they give the person enough rope to hang themselves with, they make an absolute minimum attempt to collect (1 call and that's all), then they send someone to re'po the furniture, as well as a bunch of other stuff to make up for all the crazy hidden fees and interest. Lots of what they seize goes back into inventory to rent out to their next victim. The remainder gets liquidated for their profit. If they can scare some cash out of people for hidden fees and take back the item, it's a double-win for them. These companies often expect to repossess the same item 10-20 times before anyone actually successfully buys it at an outrageous price after all the hidden fees and interest. That's why the call them "rent-to-own."

I'm not sure how you're distinguishing the 'rent-to-own' guys from the tactics of some of the big banks, especially Provident(sp?). The business model of the 'rent-to-own' is to re-po stuff and re-rent it, the bank's business model is to find those same 'shaky' people, convince them to take out a loan, and then screw them with interest and late payment fees. I don't see how they're that different. Given a choice, I'd rather be screwed over by the 'rent-to-own' people - at least at the end of the day, you're standing in an empty apartment, but you're free. With the banks (and the new bankruptcy laws) you're stuck for life. I agree that high risk finance is a needed aspect of our economy, but that should be for people approaching the bank with some risky venture plan, not having sale reps hunting down the mentally challenged and lying to them ("no, honestly, you're payments will go down with our loan....").

 

[FidelCashflow]

Originally Posted by arced

I'm not sure how you're distinguishing the 'rent-to-own' guys from the tactics of some of the big banks, especially Provident(sp?). The business model of the 'rent-to-own' is to re-po stuff and re-rent it, the bank's business model is to find those same 'shaky' people, convince them to take out a loan, and then screw them with interest and late payment fees. I don't see how they're that different. Given a choice, I'd rather be screwed over by the 'rent-to-own' people - at least at the end of the day, you're standing in an empty apartment, but you're free. With the banks (and the new bankruptcy laws) you're stuck for life. I agree that high risk finance is a needed aspect of our economy, but that should be for people approaching the bank with some risky venture plan, not having sale reps hunting down the mentally challenged and lying to them ("no, honestly, you're payments will go down with our loan....").
The difference is, the banks want you teetering on the edge. The rent to own guys want to push you over. Besides the new bankruptcy laws also apply to these rent to own places. Just as they make hard if not impossible to wipe out credit card debt, they can make it hard, if not impossible to wipe out debts to these rent to own places. Maybe they're equally bad, but they are different. If it makes you feel any better, the recent sub-prime mortgage meltdown hammering financial institutions could be considered "cosmic justice" of sorts. The same guys who made killing buying securitized debts found the FMV of their investment vaporized overnight, leading to massive write downs of their assets that they handed over cash for. Of course it's left for guys like myself to clean up the mess in some ways. Maybe we should start an outlaw-interest movement. From now on, there will no "loans" only investments, no "interest" only equity. If the borrower suceeds, the lender suceeds, if the borrower fails, the lender fails. This way the lender's and borrower's aims are aligned, not one exploiting the other's failure for their own gain.

 

[grimslade]

Originally Posted by FidelCashflow

Who are you talking about, the black guy?



Yes.

Originally Posted by FidelCashflow

Did you just make that word up? I can honestly say I've never heard it in my life.



No.

 

[kshah]

Where did everyone view this movie? Not on youtube...

 

[SoCal2NYC]

Netflix

 

[Stylin-1]

I just watched this movie and though I feel bad for the mothers of the two suicide victims, I think it's a crock they're placing the blame on the CC companies. These kids evidently had an underlying mental illness which predisposed them to do what they did. People who are mentally healthy don't kill themselves over 10K in debt. I've been deep in debt in the past and it was nobody's fault but my own. It's amazing to what lengths people will go in placing blame on others in our society. Perhaps they should be reflecting on their own inability or the inability of the kids' peers, teachers, etc in having missed the signs of their desperation. I can assure you it did not form overnight.

 

[FidelCashflow]

Originally Posted by Stylin-1

I just watched this movie and though I feel bad for the mothers of the two suicide victims, I think it's a crock they're placing the blame on the CC companies. These kids evidently had an underlying mental illness which predisposed them to do what they did. People who are mentally healthy don't kill themselves over 10K in debt. I've been deep in debt in the past and it was nobody's fault but my own. It's amazing to what lengths people will go in placing blame on others in our society. Perhaps they should be reflecting on their own inability or the inability of the kids' peers, teachers, etc in having missed the signs of their desperation. I can assure you it did not form overnight.

Totally agreed. But at the same time you have to look at this movie for what it is... entertainment, not hard news.

 

[dusty]

Originally Posted by kshah

Where did everyone view this movie? Not on youtube...

I linked to it in the other thread where this movie is mentioned. I think it was on Google video.