Shiesters Can Advertise, Too

For the past few weeks, we've been watching the early Fox news in our lunchroom at work.  With all of the local drama over the David Camm case and with the Michael Jackson trial going on, we like to be informed.  During this half-hour newscast, I've noticed a thought-provoking trend.   The majority of the commercials are for:

      -  ambulance chasing lawyers 
      -  car insurance for drivers who don't have car insurance
      -  payday loans/cash advance places
      -  rent-to-own furniture/electronics places

Is it just me, or does anyone else see a pattern here?

Since lawyers have been able advertise on tv and radio, there's not too many people in the city of Louisville that doesn't know who The Kentuckiana Hammer is.  For those not from Louisville or southern Indiana, it is none other than Darryl Issacs. During this midday news cast they showed 2 commercials for him.  One of the commercials shows him walking through a wall of fog, just like when they introduce a WWF wrestler on Smackdown or whatever their wrestling shows are called.  He says he can get you the money you deserve. 

Another favorite advertiser is Jackie Adair.  With her annoying country accent, she tells uninsured motorists to just give her a call and she'll be happy to give them auto insurance.   She's come a long way in her commercials.  When she first started advertising locally, it was just her talking about the insurance.  The current commercials are a big production - it shows her standing in front of a phone bank of about a dozen or more people, all of whom are smiling as they talk in the phone and give car insurance to the uninsured.  

As for payday loan and cash advance places, they're nothing more than legalized loan sharks.  I did some research about this for a class in graduate school.  I was shocked to read the statistics.  75% of the borrowers rollover their payday loans at least once; over 35% rollover 7 or more times.  For the length of the loan, the APR averages from 390% to 780%.  At first, it's unassuming -- you write them a check for $200 for the cash they will give you on the spot.  They'll hold this check for 2 weeks.  You write them another check for $40, which they will cash now.  In two weeks, you can pay them $200 and get your check back to destroy, or you can pay them another $40 and roll it over two more weeks.  It's a sad cycle. 

The rent-to-own places are near and dear to my heart.  I've always said that if I could get my hands on some money, I would buy a bunch of TVs, stereos and cheap living room furniture and open my own rent-to-own place.  The money they bring in is insane.  Seriously, I don't think my conscience would let me be a shiester like that. I also did research on this subject for the same class.  For the example, let's use a Sony Playstation.  You can rent it for $13.99 a week If you rent it for a year, you can own it for a total of $727.48. At the time I did my research, you could buy one for about $129.99.  Subtract that from your rental fees and you're paying about $600 in interest.  Now the simple (but incorrect) way to calculate interest would be to divide the interest charged ($597.49) by the amount borrowed ($129.99). That works out to a 459% interest rate for the one-year loan. The correct way would show that it's actually higher, because we didn't borrow the whole $129.99 for all 52 weeks-- part of it was paid down each week as the year went on. The actual rate is about 557%. Need I say any more?