Introduction of Personal Loans Part 2
The advantages to the borrower are even clearer. Attorney-General Ottinger, of New York State, has made a long investigation of the loan shark industry, and he has found that an uncomfortably large proportion of his fellow-citizens have been paying interest ranging from 14 to 36 per cent for loans which they could not, in most cases, have obtained except from gougers. Because of these fearful rates, the victims have often slumped deeper and deeper into debt. New York’s laws against usury are probably as stringent as they can be made—those of many other States are certainly much laxer—but the framing of these provisions is extremely difficult, their enforcement even more so. Personal loan departments may not drive Shylocks out of business entirely, but they will force them to confine their attentions to a class with which reputable institutions would not care to do business.
Although it has not limited rigidly the purposes for which loans will be considered, the National City Bank expects that most of them will be for medical and other emergency expenditures, home improvements, and property charges. The whole plan is in the experimental stage. Only experience will show definitely what types of loans are the sound-est and the most productive of further business.
The lending of money to pay for an operation, to take a typical case, some-times will benefit not only the patient but the physician. The excessively scrupulous man will not postpone necessary treatment because he cannot raise funds and will not accept charity services. Nor will there be as much excuse for the non-payment of a doctor’s bill by a less meticulous patient.
“Since you are in debt,” the doctor might say, “why not transfer your obligation to the personal loan department, which makes a business of lending, and pay me?”
Source: The Outlook, 23 May 1928
Related posts:
- Introduction of Personal Loans Part 1
- Introduction of Personal Loans Part 3
- War Bread in Peace Time
- Status of Credit Unions 1925
- Credit and the Federal Reserve Part 3
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