On Tue, 15 Apr 2008 07:58:07 -0400, gordonb.jd041@burditt.org (Gordon Burditt)
wrote:
I saw a news report about this web site:
http://www.prosper.com/
I went to check it out and people there from PA are asking for loans, but
say the state only allows them to pay 6% interest for a loan. I live in PA
and the credit card companies get a lot more than 6% from PA residents.
What gives?
PA throws *borrowers* in jail for paying too much interest? Does
that mean they can stay out of jail by defaulting?
What TYPE of loan is this? That law might apply only to secured loans
or loans secured by real estate, not credit cards.
The loans are not secured. The site (prosper.com) I was referring to is kind of
like an eBay for loans for people with bad credit. People looking for a loan
advertise on the site and tell what interest rate they are willing to pay for
the loan.
Then people with the money "bid" on financing all or part of the loan. It's a
little
more complicated than that, but that's the basic concept. People from some
states other than PA advertise they will pay as much as 35% interest for a loan,
while people from PA claim they can't pay more than 6%.
Also, where did the loan take place? I seem to recall some ruling that
it takes place at the corporate headquarters of the credit card company,
which probably isn't in Pennsylvania.
The way I understand it is that it doesn't matter where the person providing the
loan is from, they cannot charge a PA resident more than 6%. But according to
Deadrat's explanation this would not be the case. The credit card companies
must have some special exception to the high interest charge to customers in
PA that this "person to person" prosper.com loan doesn't have.
Jeff
