Payday Loans: What is your opinion?

[brandondrury]

Hello,

I started a site a while back with the focus on being the truth about payday loans from my point of view. I'm looking to get other points of view.

Do you feel that government has a right to control or even ban payday lending?

Personally, I feel that there are positive uses for payday lending, but only in rare cases. When you look Payday Loans: The Real Numbers you find that when in a bind there is no cheap solution. Sometimes payday loans are the cheapest temporary solution to the problem.

Then again, there are many people who can't seam to control themselves. While I haven't figured out what stops these people from running out in front of fast moving traffic, they do seam to have the ability to function normally in society in every situation except when dealing with money.

I'm of the opinion that the government should stay out of it. I think that people should educate themselves and if they chose not to educate themselves, it's their own problem.

Brandon

[Ima saver]

I don't think anyone should get a payday loan. The interest rate is terrible! I learn to save my money when i was a child. So I was never in a bind and had to borrow money. We need to education our children.

[brandondrury]

We need to education our children.

Well there is no doubt about that. I agree completely. A person who uses discipline should never need a payday loan.

[PRICEPLUS]

Usurious rates that keep people in debt for long periods of time. I think they take advantage of those least able to help themselves. Payday loans used to be made by people called loan sharks. The difference now is that loan sharks have formed legal companies to rip people off! I think this industry should be kept under a microscope. Not one of these companies is in business because they have the best interests of people at heart!

[Ima saver]

You are exactly right, priceplus. They were called loan sharks in the old days! I worked at General finance for about 6 months and it was the worst job I ever had. Loaning money at 18-24% interest and then trying to get the money. I had to repo a car once. That is awful.

[brandondrury]

I can't understand why these payday loan services are so popular to be honest.

The focus of pdadvance.com quickly went from payday loan information to debt reduction information simply because I felt it necessary to help people get out of the situation that they are in.

Brandon

[Snoopy2645]

I cant understand why anyone would want to use one but I am sure the ones who are using them are not doing it because they want too. I would do anything for money before I used one of these because I do believe once you use them you fall into thier trap. And have to keep using them. I really think they wont last much longer. I think they are a fly by the night service you see them suddenly popping up on every corner I dont think it can go on forever.

[brandondrury]

I think they are a fly by the night service you see them suddenly popping up on every corner I dont think it can go on forever

You may be right. I just recently read that there are more payday loan businesses than there are McDonald's in America.

Brandon

[Ima saver]

I think they are here to stay. Our little town has one and it is located right next to a small grocery store that sells only hispanic foods. I think many of the immigrants do not understand how much of an interest rate they are paying.

[sweeps]

If I can play Devil's Advocate for a moment, some people run into emergency situations where they need money and no one else will lend to them. Like them or not, the payday loan and title loan companies fill a need. They have to charge a relatively high rate of interest due to the high risk they're incurring.

I agree that the rate of interest they are charging should be 100% transparent. But again, if someone is in an emergency situation, the rate of interest won't really matter much.

[weiwentg]

Originally Posted by Sweepsplayer

If I can play Devil's Advocate for a moment, some people run into emergency situations where they need money and no one else will lend to them. Like them or not, the payday loan and title loan companies fill a need. They have to charge a relatively high rate of interest due to the high risk they're incurring.

I agree that the rate of interest they are charging should be 100% transparent. But again, if someone is in an emergency situation, the rate of interest won't really matter much.

you make a good point. in response, though, those who seek payday loans may already be very desperate, and the stringent terms of the loans may make it likely that they will default - which will cost them money they don't have, and affect their credit. they may not be educated about finances, either, and may not fully understand the risks they are taking.

I'm not generally a fan of big government. I think banning payday lenders is probably too heavy-handed. what the government could do is to step up enforcement of the equal credit opportunity act, and/or expand it. it could also give incentives to community development financial institutions, like Grameen Bank or Self-Help Credit Union, which make market-rate but not predatory loans to underprivileged communities.

[jhd815]

Personally I am against payday loan businesses. I feel they prey on the poor and those living from paycheck to paycheck. I live in the suburbs of Chicago and I notice that they are primarily located in the poorer areas of the city and suburbs.

On the flip side I do see where they fill a void that is needed for people in desperate situations who cannot access normal loan services.

While I don't like the idea of the government banning them altogether, I wouldn't mind if gov. stepped in and made sure that those who use these services get ALL information up front and understand fully what fees, charges, and risks are involved.

[brandondrury]

You bring up an important issue. When it comes to "exploiting" those down on their luck, banks and credit cards are the worst. I'd argue even worse than payday loans. If you make a slight mistake in your checkbook and overdraft by a few dollars, the banks will gladly hand you a bill for $150. If you happened to write 3 or 4 tiny checks that day, they hammer you death with NSF fees. I've had friends who've been hammered a $30 fee for being $0.87 in the hole. Give me a break. It's obvious that banks are the ones smashing the poor. It's sad.

It bother's me that a person who doesn't realize that his checkbooks is a little low can get smashed with huge NSF fees, but a person who knows exactly what they are getting into with a payday loan is somehow not responsible for their actions.

There are a lot of valid arguments against payday loans. Every one I've heard takes personal accountability out of the equation and seams to infer that some people aren't intelligent enough to make their own decisions or take responsibilities for the results of those decisions.

What do you think?

Brandon

[jmjj215]

Payday loans are the equivalent of highway robbery in my mind.

[jhd815]

Brandon,

You make a valid point regarding the banks and their fees as well as the fees associated with credit cards.

Just to be clear, in my previous post I wasn't trying to infer that people were not intelligent enough but rather that they don't always get straight information and therefore make decisions based on that misinformation (in case you were referring to my post).

I think the most important thing that any of us can do, whether as individuals or as a community, is better educate and inform our children about finances and how to manage them. Every high school freshman should be required to take a course that teaches the basics about budgeting, cashflow, banking, credit cards, credit, home mortgages, investing, etc. From the posts I've read, the majority of us on this forum learned the hard way by making mistakes and then figuring out how to get out from under our bills and debts. Neither my parents or my teachers ever taught me about these topics and yet they are vital to living our lives as much as knowing how to drive a car or apply for a job.

Stepping off my soapbox now ...

[brandondrury]

Neither my parents or my teachers ever taught me about these topics and yet they are vital to living our lives as much as knowing how to drive a car or apply for a job.

I know the feeling. In regards to education, I agree 100%. I'm not sure why finances have been left out of high school curriculum. I'll blame it on the low pay of the people we employ to teach our kids. If we paid them more, we'd get people who understand money teaching them, maybe.

I wonder how many people feel that they were mislead by a payday loan company? I've heard sad cases where people spent over $10,000 with payday lending companines. I guess these people didn't understand basic math and just sort of jumped in blind. Maybe they were financially desperate enough to just jump in and didn't notice the long term issues involved.

Brandon

[lillian]

I always wonder this when I see people complaining about payday loans, have any of you every actually used one? I have a feeling the people doing all the complaining and wanting them banned have never been in a position where they were a few hundred bucks short.

For me, paying $30 to take out a $200 ladvance on my paycheck makes sense. There are times when I've written checks to pay bills like my credit card and sent off before the due date (because the late fees are $39). It takes less than a 1/2 hour to get the cash at a payday loan place, I can then quickly deposit it and avoid bouncing a my check and returned check fees and late fees.

Maybe other people have people they can borrow from to cover situations like this, but I don't. My bank offers some sort of loan, but it takes a few days to approve my application and that wouldn't help.

For me, using a payday loan a few times a year actually saves me untold numbers of dollars in other charges.

Unless any of you have actually been in a situation where you need extra cash to cover bills, I don't think you have a right to complain. And please don't support a ban of payday loans. It would be bad for those of us who use it.

[Ima saver]

Well I have never been in that situation, so I won't complain, I am just sorry that you have to use the payday loan.

[Optsol]

Back to the original post. Payday loans are bad. Gov't involvement in payday loans is worse

[brandondrury]

Back to the original post. Payday loans are bad. Gov't involvement in payday loans is worse

That's a brilliant way of looking at the situation. It appears that Lillian doesn't agree with about payday loans being "bad", but that's okay.

To be honest, I'd guess that cable TV is a greater detriment to society and payday loans. But that is just my opinion.

Brandon