2/12/16 “An in investm tment t in in know owledge ge always pays the the best t in inte terest.” .” Assess the impact of using high cost, Why does this maEer to our students? non-depository financial service providers such as – Check Cashing Services – Payday Lenders – Rent-to-own – Pawnshops 1
2/12/16 Are you beEer off cashing your paycheck at the bank or the check cashing service ? Are you beEer off cashing your paycheck Check it Out! - Get Smart About Money at the bank or the check cashing service ? hEps://www.youtube.com/watch?v=ApFXYZqE004 hEps://www.youtube.com/watch?v=ApFXYZqE004 2
2/12/16 …in our state although payday lending loans are NOT legal, payday lenders have managed to conduct business anyway. So how can you get a payday loan in Pennsylvania? PAYDAY LOANS NS LO LOANS …and endless cycles of debt Certain demographics are more likely to use payday loans than others – e.g. the odds of using a payday loan are: • 57% higher for renters than for homeowners • 62% higher for people earning less than $40,000 than for those earning more • 82% higher for people without a college degree than for those with a four-year degree or higher • 105% higher for blacks than for other races/ethnici_es hEp://www.npr.org/2015/03/26/395421117/payday-loans-and-endless- cycles-of-debt-targeted-by-federal-watchdog Source: Pew Charitable Trust 3
2/12/16 LOANS NS hEp://www.consumer.ac.gov/media/video-0078-payday-lending hEp://www.econedlink.org/teacher-lesson/1211/ hEp://www.econedlink.org/teacher-lesson/1211/ 4
2/12/16 Lis List Price ice vs Rent ent-t -to-o o-own n Price? ice? Lis List Price ice vs Rent ent-t -to-o o-own n Price? ice? Easyhome: The high costs of rent-to-own (CBC Marketplace) hEps://www.youtube.com/watch?v=ObzdrjhEk-M hEps://www.youtube.com/watch?v=ObzdrjhEk-M s k e e w 6 5 1 r o f k e e w / 9 2 $ y l n O ! ! 4 2 5 , 4 $ Does not play on the iPad – requires Easyhome: The high costs of rent-to-own (CBC Marketplace) hEps://www.youtube.com/watch?v=ObzdrjhEk-M hEps://www.wisc-online.com/learn/formal-science/mathema_cs/abm3702/ what-i-want-nowthe-hidden-costs-ofrent-to-own 5
2/12/16 • They look the same but work differently. • Which one helps you build credit ? • Which one helps you avoid overspending? 6
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2/12/16 Student Assignment Compare and contrast Student Assignment the buyer’s Research the costs alterna_ves e.g. of acquiring a - How many weeks to Rent-to-Own item save enough money currently adver_sed to pay List Price like an iPad versus versus acquire at purchasing it RTO Price? on Amazon.com . Graph your results. • An independent, nonprofit organiza_on serves consumers through unbiased product tes_ng and ra_ngs, research, journalism, public educa_on, and advocacy. • “We stand firmly behind the principle that consumer products and services must be safe, effec_ve, reliable, and fairly priced. “ • “We insist that manufacturers, retailers, government agencies, and others be clear and honest.” 8
2/12/16 Invite your students to create an adver_sement showing how RENT-TO-OWN can some_mes mean RENT-TO-OWE . 9
2/12/16 hEp://money.howstuffworks.com/pawnshop.htm “If an item is priced at $100 new, and the pawnbroker thinks it will sell for $60 used, then the loan amount would be $20. “ “The pawn Kcket for this item would ask for $24.40 …and all the (2 % interest fees paid plus 20 % in other fees) in 30 days.” to get it back! 10
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