Do Payday Loans “Victimize” People?

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« JLP’s Weekly Roundup | Main | Dave Ramsey Links and Stuff »

Do Payday Loans “Victimize” People?

By JLP | April 24, 2007

I’m pretty sure I have made my stance clear on payday loans. They’re expensive and I hate ‘em. That said, I do take issue with an editorial (pdf) I read today in my local paper. The piece was written by Don Baylor who is a senior policy analyst at the Center for Public Policy Priorities. Here’s the part of his editorial that bugs me:

Nationwide, many workers are falling victim to “payday” loans—short-term loans that give workers a cash advance on their paychecks. Large numbers of military families use these loans to help make ends meet between pay periods. So do millions of low- and middle-income people across the country. The problem is that these loans come with a major catch—exorbitant interest rates that begin at 400 percent Annual Percentage Rate (APR) and can surpass 1,000%.

It is typical for a worker to pay $180 in interest on a 10-day, $700 loan.

These high interest rates make it nearly impossible for workers to repay the loan on time, causing many workers to refinance and borrow again just to pay off the interest on the first loan. One emergency can lead to a debt spiral, as borrowers take out an average of nine loans per year. The result? More loans, more debt, and more bankruptcies.

Like I said, I hate payday loans. But, why is it that every time there’s a problem, it’s always because people are victims of something? What the heck happened to personal responsibility? If people are victims of anything, it’s their own lack of sound judgement. Seriously, if people didn’t use payday loans there wouldn’t be payday loan companies.

I think the number one problem in our country right now is the victim mentality!

Topics: Rant |

Comments to “Do Payday Loans “Victimize” People?”

DLF Says:
April 24th, 2007 at 10:23 am

And if people didn’t use heroin, there wouldn’t be drug cartels. So why not leave those drug cartels alone, huh?

ScurvyDawg Says:
April 24th, 2007 at 11:24 am

I agree with the author that there is a real lack of personal culpability. It seems to always be somebody else’s fault.

When you get a payday loan it is easily laid out what the terms are and these are very short term loans and so to look at them and say they are 1000% APR is unfair.

The above commenter says that if people did not use drugs there would be no drug cartels. Well the only reason there are drug cartels is because the government has taken a medical issue, addiction, and turned it into a criminal matter. How does that relate in any way shape of form to what this article is about.

Curious Says:
April 24th, 2007 at 11:36 am

I have to disagree in part. Yes, personal responsibility is important. But so is not taking advantage of others’ 1) lack of responsibility, 2) desparate circumstances, and 3) ignorance about finances.

That’s why it’s called predatory lending, and it makes me sick. Arguably, it’s better in the long-run for society and the individual that someone who “needs” the money can’t get it in this way, and has to learn to save for it or tighten the belt.

Moneymonk Says:
April 24th, 2007 at 11:37 am

Payday loans should be banned. But when people are desperate they create these loans. I feel whatever I need to pay, if I cannot afford to pay it, I have to let it go. I would never persuade myself to get a payday loan.

LegalTherapy Says:
April 24th, 2007 at 11:41 am

I disagree with one of Scurvy’s points; I don’t think those loans have terms that are easily laid out.

I also think JLP is being a bit too binary here. It’s not either people are complete victims OR there’s nothing wrong with payday companies gouging prices. Sometimes people need a little help between paychecks (for reasons of their own doing or not) and there’s nothing wrong with payday companies making money servicing that need. There is something wrong with payday companies absolutely screwing people that have no other choice. We regulate things all the time because there’s a power differential between parties and we don’t want to let the more powerful party run roughshod over the other. Our free market system’s great, but even we recognize limits to the benefits of a free market sytem and we enforce limits when necessary. I mean, to take a hugely obvious example, we have an ANTITRUST regime exactly because of that. No one says, well if you don’t want a [insert any service] from the one company that makes it, don’t buy it. No, we regulate it.

Same thing here, these payday companies have a right to get paid but I see no problems with regulating how much they can screw their customers.

Minimum Wage Says:
April 24th, 2007 at 11:42 am

I would argue that the problem has its roots in the loss or property rights for the working poor which started 80 years ago.

Because the working poor lost their property rights, they cannot buy and own the roof over their head (which would allow them to stabilize their housing costs and to build wealth), forcing them to rent at exorbitant prices due to the government-imposed artificial supply restrictions (NIMBY, zoning) which prevent the private sector from filling the unmet need for affordable housing. (The low end of the rental market has minimal vacancy and inelastic demand.)

In my state, an estimated 20 percent of all renters pay at least half their income for rent, making it difficult for them to save up any money or build wealth and credit.

Where is the personal responsibility of those who support and vote for taking property rights from the working poor?

Customers Revenge Says:
April 24th, 2007 at 12:28 pm

Payday loans are totally ok in my mind, although a bad deal. There is a lot of competition and no deception. The poor aren’t poor because of these loans and their fees. It is quite a dilemma, how much the goverment should get involved. There are some financial fees that I think should be regulated away. I wrote a little entry about ATM fees, which in Canada are quite high and one of our leftist political parties suggested they be controlled. The capitalists made fun of me The issue of government protection versus free market and personal responsibility is interesting to discuss.

plonkee Says:
April 24th, 2007 at 1:10 pm

Sometimes people really are victims - of their circumstances, choices and lack of education. Improving the way payday loans do business probably isn’t a bad thing and if using victim mentality helps the end result then maybe thats a legitimate tactic.

What is society for if not to help the less fortunate?

MossysF Says:
April 24th, 2007 at 1:31 pm

I read through a history of credit and earlier in the 20th century, payday-style loans were banned. This actually made things worse because banks and small lenders no longer could charge high interest for cover the high rate of detaults and simply didn’t offer credit anymore to that segment. The compromise our government finally settled on was creating/funding non-profit credit counselling services.

Now it seems everybody has forgotten history and there are cries everywhere to ban payday loans. It’ll be another repeat. There’s a saying about leading horses to water. Removing payday loans will not stop the “victims” from spending money they don’t have.

Independent George Says:
April 24th, 2007 at 2:09 pm

Let’s forget the outrage over issues of ‘responsibility’ vs. ‘compassion’, and focus on the economics. Most of the argument in favor of legislation proceeds on the assumption that the loans are inherently immoral, when, in fact, morality has nothing to do with it. It’s purely a question of risk.

Interest rates are a response to credit risk - nothing more, nothing less. The high interest rates are a hedge against the high likelihood of forfeiture. I don’t dispute that these loans (1) are targetted at the poor and desperate, (2) many won’t be able to repay, and (3) it’s in society’s best interests if that doesn’t happen. The problem is that that denying that loan does nothing to help them, either, and may in fact make them worse off.

Let’s assume that payday loans were suddenly regulated, and that interest rates were capped at 20% APR. Great deal for everyone who would otherwise have paid a higher rate, except that they won’t be getting the loans anymore. People who would have qualified at those rates before are completely unaffected by the regulations, while the rest are denied capital. So where does that leave them? They’re in the exact same position as before, minus one option - faced with a choice between bankruptcy, pawn shops, or crime.

Regulating loan terms won’t work; in fact, will likely make things considerably worse.

Kurt Says:
April 24th, 2007 at 2:23 pm

Does this sound similar to the whole backlash against sub prime mortgages to anyone other than me?

Lazy Man and Money Says:
April 24th, 2007 at 2:30 pm

“Same thing here, these payday companies have a right to get paid but I see no problems with regulating how much they can screw their customers.”

I think the free market should do the regulating. If some place is charging 400% annual interst, then an entrepenuer should open up shop across the street offering 300%. That should continue bringing prices down until they are a fair rate for their service.

Why hasn’t this happened? I’m not sure. The only thing that seems to make sense to me is that perhaps they NEED to charge an annual 400% because people aren’t paying them back. It still seems to be excessive to me.

Kurt Says:
April 24th, 2007 at 2:33 pm

“Interest rates are a response to credit risk - nothing more, nothing less. ”
Technically there’s a component that is the time value of money. Typically this is seen as the equivalent tenor treasury. In these cases there is certainly an element of risk pricing, but at least the first 5% or so is due to the fact that money will be tied up, and it would still be there even with no chance of default.

Kurt Says:
April 24th, 2007 at 2:35 pm

“Why hasn’t this happened? I’m not sure. The only thing that seems to make sense to me is that perhaps they NEED to charge an annual 400% because people aren’t paying them back. It still seems to be excessive to me.”
I think part of the reason is the reputation these places have. One of the “costs” of doing business in this arena is having to live your life as a payday lender. To many people this is a stigma and perhaps if it is lifted, the barriers to entry fall? Puts the whole backlash in a new light, I think.

samerwriter Says:
April 24th, 2007 at 3:10 pm

Payday loans “victimize” people. Credit cards “victimize” people. Insurance companies “victimize” people. Mortgage companies “victimize” people.

Any time a consumer borrows money there is someone profiting on that person’s inability to pay cash.

Those with a high risk of default pay more. That’s just common sense. It has nothing to do with victimization.

Are the guys running these loan companies multi-millionaires? I’d wager most of them aren’t. So I guess there’s not that much profit in their high fees after all.

Minimum Wage Says:
April 24th, 2007 at 3:17 pm

Why are you free marketeers casually ignoring the elephant in the financial lives of the poor?

Because the poor are denied a free market in housing, they must pay staggering proportions of their income for inflated rents. For the same reason, the poor are denied the ability to stabilize their housing costs like mostothers can, and also denied the opportunity to build wealth and credit.

If the working poor enjoyed a free market in housing, they would pay much less for housing and would be able to build wealth and credit and wouldn’t need predatory payday lenders.

samerwriter Says:
April 24th, 2007 at 3:50 pm

The poor have the exact same market for housing that everyone else has.

Kurt Says:
April 24th, 2007 at 3:53 pm

Okay, I’ll bite. Why is the housing market not a free market?

JLP Says:
April 24th, 2007 at 4:12 pm

Minimum,

I’m with samerwriter and Kurt. I don’t see how the housing market isn’t a free market?

Minimum Wage Says:
April 24th, 2007 at 4:39 pm

To samerwriter:

Nice dodge. I never suggested that the poor do not have the same exact (sic) market for housing that everyone else has. All I suggested is that the housing market is not a free market. Do you consider a tilted playing field to be level as long as everyone faces the same tilt?

To Kurt:

Thank you! The working poor started losing their property rights in the 1920s when the Supreme Court upheld an early zoning ordinance - to be followed of course by many thousands of zoning ordinances across the country.

While zoning has a primary beneficial effect of reasonably segregating land uses - nobody wants a pig farm next to a subdivision - it has evolved into a tool for government to socialize property rights for the collective benefit of property owners to the detriment of non-owners, through the imposition of higher costs of entry. Specifically, urban and suburban zoning prohibits property increments affordable to the poor. (I don’t need a huge house on a 10,000 square foot lot, but I’m not allowed to buy and build on 2,500 square feet which I can afford.) The average homeowner, having cleared the hurdle created by government, sees no problem with leaving the hurdles in place and is disinclined to afford the poor a lower hurdle than he faced. (Besides, who wants more poor people in the neighborhood when they can simply be zoned out?)

Zoning today is used to artificially restricts the supply of housing, thereby driving prices up, and often to exclude housing types (and thereby those who would inhabit them) considered undesirable. Even Thomas Sowell has acknowledged that zoning regs redistribute wealth upward from renters to owners.

Millions of Americans are paying more to rent than it would cost them to buy. So why can’t they buy?

Independent George Says:
April 24th, 2007 at 5:46 pm

I think he means that the mortgage interest deduction is basically a huge subsidy to the middle-class, while excluding low-income renters who can’t afford to buy (indeed, it actually drives up housing prices, as middle-class buyers are able to afford more expensive homes which price out lower-income people).

At the same time, though, there are some pretty substantial subsidies to low-income homeowners. For example, Chicago gives low and moderate income buyers 4% of the purchase price, as well as sub-market rates on a 30-year mortgage. HUD also lets low-income homeowners take an itemized deduction on their federal tax return of 20% of the mortgage interest paid, in addition to the regular mortgage interest deduction on the remaining interest payments.

Independent George Says:
April 24th, 2007 at 5:58 pm

#13 - You’re right, of course. I guess the more accurate way to put it is that the differences in interest rates for a given loan period are due to differences in perceived credit risk. It’s the same with bond markets - the lower the investment grade, the higher the yield.

Curious Says:
April 24th, 2007 at 6:14 pm

Some of you are being disingenuous, I think. There are all kinds of barriers to wealth (inclusive of “the market”) at the low end.

What’s the cheapest car you can buy that doesn’t cost you double the purchase price in maintenance every year? How easy is it to find a good job if you have to walk there, or your car is in the shop a lot?

What’s the cheapest apartment you can rent, and how much is the security deposit? How stable (and safe) is it?

What are the minimums for your high-yield MMA? Sure $1K is low–unless you don’t have it. Do you know the going NSF fees these days?

If you can’t get a good job because you have no education or skills or experience, or can’t keep one because of transportation or health issues, how are you going to save for a down payment for an emergency fund or a house in your 0% interest checking account or under your mattress?

The last thing you need is a 24% APR CC or a 35% payday loan to ruin whatever credit you do have.

samerwriter Says:
April 24th, 2007 at 11:32 pm

I looked at the list of those “barriers to wealth” and could identify with nearly all of them.

As could, I suspect, many other people.

Nobody starts out with education or skills or experience. Those things come in time if you seek them out. If you choose not to, well, there’s a payday lender around the corner willing to “help you out”.

JLP Says:
April 24th, 2007 at 11:45 pm

Curious,

There are barriers to everything. Does that mean we should just give up because there are barriers? It seems like people limit themselves by only thinking about what they lack instead of looking for a way to break through it.

Paul Says:
April 25th, 2007 at 6:01 am

Pay day loans exist because the fill a market need. Although the interest rates are high, I cannot see any reason to believe that the market is not a competitive one. The payday loan stores are now everywhere. So I think it is reasonable to infer that the rates charged reasonably reflect the risk involved.
If pay day loan stores did not exist, high risk borrowers would go to loan sharks, which is hardly an improvement.

Steve Says:
April 25th, 2007 at 12:14 pm

I have to agree with some of the other posters in that market competition likely has payday loans as low as they will go considering the large risk and that people who NEED the money would instead go to loan sharks.

And yet, the problem is that the high costs may kick in a viscious circle… so if people were in a bad spot before, they’re totally reamed after using the service.

I think this will not be solved by dealing with the payday loans, but rather by providing financial education and resources to those in need.

Miguel Says:
April 25th, 2007 at 1:48 pm

I approach this topic with more than a few reservations. Having grown up relatively poor and surrounded by a lot of poverty, I can and do empathize with the idea that payday loans prey on the weaknesses of the weakest members of our society. When I was a kid growing up in the projects, I don’t recall there being payday lenders, but we had lots of similar ways for folks to get their money early (and at a big cost).

First, you had pawn brokers. These were the original “payday” lenders. They’d take your stuff, loan you pennies on the dollar for it, and then screw you with fees (or by taking your stuff) when you couldn’t pay it back. Were they predatory? Well, in a sense, yes, because they were the lender of last resort, but of course, who’s fault was that.

Secondly, you had loan sharks and bookies. No description needed there. Very high cost, even costlier when payment is delinqent. Same with drug dealers - they would extend credit too, knowing their clientele would eventually be coming back for more.

In fact, you had credit from all kinds of sources. I remember being able to sign for goods at the local deli store. Mom would send me for a quart of milk, I’d sign for it. No need for cash. And she was always perpetually behind in paying her bill - everybody was. Something tells me that the “interest” associated with this credit was loaded into the prices of the goods, which probably cost 50%-100% more than the suburban stores charged.

There is no doubt in my mind that there is a very high cost to being poor. Part of that is due to ignorance. Part due to the fact that serving the poor can be costly. I’m sure that our local deli owner had to write off a big portion of his receivables, not to mention to risks to his safety operating in a crime-ridden ghetto. He was sadly fatally wounded in a robbery attempt and the store closed after his family finally decided they’d had enough.

Access to capital is one of the key determinants of wealth. And clearly, the poor lack this access for any variety of reasons - one of them being the extremely high risk associated with serving certain communities. I don’t think its a conspiracy. I just think that this is the way it is. At the end of the day, we were all quite sad to see our over-priced, credit-friendly deli close down, leaving us with even bleaker choices.

Minimum Wage Says:
April 25th, 2007 at 3:45 pm

this is a test

MossysF Says:
April 26th, 2007 at 5:07 am

Some interesting reading here:

http://myvesta.org/history/

Basically, Miguel’s description of his local deli was the norm before credit cards. All the local stores, craftsmen, doctors, etc. maintained their own credit records. We’ve been knee deep in debt since the Sumerians.

Independent George Says:
April 26th, 2007 at 9:26 am

Great link on mortgage ‘protections’ at the WSJ.

Miguel Says:
April 26th, 2007 at 10:00 am

@ Independent George - Wow. That WSJ article is SCARY. It never ceases to amaze me just how far politicians will go to pander to the whole populism thing.

This thinking is pretty much along the lines of the statement from one of the presidential candidates along the lines of “two Americas…one privileged, the other burdened…one America that does the work, another that reaps the reward. One America that pays the taxes, another America that gets the tax breaks.”

As an American that works hard for everything I’ve ever earned, this kind of rhetoric makes me want to hurl. I am quite sure I pay my fair share of the taxes.

Sam Says:
April 26th, 2007 at 10:05 am

Congratulations, JLP - 31 comments and counting. Keep those hot-button posts coming.

This discussion reminds me of something that happened to me back in the late 1970’s. I was working the evening shift at a computer manufacturing company while I was in college. This was basically a near-minimum wage job, but the hours fit and it was in my career interest area.

A young couple started to work there, in their early 20s. (I don’t think they stayed long.) They were married, but neither wore a ring. At some point, someone there asked them about it. The wife replied something to the effect that they had pawned their rings to pay for tickets to a rock concert, and that they didn’t have the money to get them back. Neither of them seemed particularly worried or concerned about it.

For some reason, this discussion brought that anecdote to mind.

JLP Says:
April 26th, 2007 at 10:53 am

Miguel,

Yeah, I can’t stand the “Two Americas” rhetoric either, especially when its delivered by a guy who has $100 million + in the bank. Give me a break!

JLP Says:
April 26th, 2007 at 10:55 am

Sam,

Thanks. What I like about these discussions is that nobody lowers themselves to name-calling. It’s great to discuss things maturely.

Miguel Says:
April 26th, 2007 at 11:58 am

@ JLP - Much like preaching conservation from your Learjet ain’t it.

Independent George Says:
April 26th, 2007 at 12:55 pm

Miguel et al (#31-36) - well, I wouldn’t go that far. I have to admit, the ‘two Americas’ thing does strike a cord within me; the problem is that heart-tugging stories are (or, rather, should be) largely irrelevant to policy. I have no problem whatsoever with giving the poor a few extra breaks, and I think that government policy is a perfectly legitimate way of doing it. My problem is that often, it’s a lousy way of doing it, and the particular policy that gets implemented is often the worst of several bad options.

EITC, Section 8 housing vouchers, saver’s credits, and FDIC have all been reasonably successful interventions in the market. Unfortunately, those successes are outnumbered by things like rent control (which causes rents to skyrocket), eviction limitations (which turn poor neighborhoods into ghettos), or, in this case, lending restrictions (which will cause a huge liquidity crunch in precisely the areas which need liquidity the most).

JDE Says:
April 26th, 2007 at 1:32 pm

I own 10 payday loan stores! It is my firm belief that the product is reasonably priced in the market and MUCH cheaper than the alternatives (nsf charges at the bank and retailer, daily overdraft fees, overlimit charges on the cc etc…) I am in my stores daily and built each from the ground up so I know the customer base very well. Let it be said there are extremes at both ends, the 20k a year person and the 80k a year person but the overwhelming majority are smack in the middle! They are not victims! They are for the most part honest, hard working people who for whatever reason struggle to make it check to check. I have been that person in my life and understand how it can happen and last for long periods of time. I am sure when considering the expenses associated with running any business especially one with higher than average risk… $15 for 100 for two weeks is not predatory nor is $45 for $300 for two weeks! Ask any customer if they would rather have 3 $100 checks bounce and pay $150 ($25 each at the bank and $25 each where returned to) or pay me $45 so they dont bounce?? Ask any customer if they can wait till payday to repair thier car that gets them back and forth to work and the kids to school and the grocerys bought or… pay me $45 to advance them $300 of there check from next payday TODAY? It’s very odd to me that all that rail against this product have no cheaper alternatives to offer and WORSE will do nothing and are basically quiet about banks that will charge you $25 to overdraw your account The national average of $70! And worse… charge the customer the $25 while taking zero risk (remember they returned the check, they arent out one penny so the have taken zero risk!) Yet I am the Predator? This is a free country and a free market, anybody is welcome to offer my product for as cheap as they like including the banks! Thats why it’s called a free market. If everybody especially the goverment would stop creating victoms with the public maybe more would be responsabile for their actions, from getting an education to managing thier finances. Just a thought, but then again why would we do that when we can just keep raising taxes or creating new fee’s and surcharges (code for new tax) that pay to keep the public in a state of victomhood and needing the goverment to take care of them!

yabadaba Says:
April 26th, 2007 at 3:25 pm

I agree completely with JDE. This whole rhetoric about the “War on the Middle Class” is helping people just feel victimized even though they are where they are because of their CHOICES. Blaming everybody else including corporations and immigrants does not change their life…It just allows politicians to move from being an ambulance chaser to a white house aspirant.

pf101 Says:
April 26th, 2007 at 4:13 pm

I agree! One thing I talk a lot about is that YOU are the only person who cares about your money and YOU are the only person who is responsible for the decisions you make regarding your money. Way too many people these days blame others when realistically the problem was caused because the person was uneducated and did nothing to change that situation. Education, or lack thereof, is a personal choice but again, it’s typically blamed on others.

Personal responsibility is something that is definitely missing from today’s society and I see it everywhere from the cashier at CVS to my co-workers.

The only advantage is that for those of us who are responsible, we stand out above the crowd and more doors open for us.

Thanks for the great post.

Miguel Says:
April 26th, 2007 at 6:25 pm

I probably fall somewhere in middle of the two Americas arguement because I’ve experienced both up close and personal. I started out in one America and crossed the railroad tracks into the other (at least as the binary thinking goes). I am now one of the “haves” by almost any definition, yet I know well the challenges faced by the have-nots.

America is a great land of opportunity - I’m living proof of that. But, it is not necessarily a level playing field. There is a case for trying to protect poor, uneducated people from making mistakes, especially mistakes that rob them of opportunities to lead decent lives. Poor credit and poor PF habits are mistakes that rob people of opportunities. Let’s face it - there are industries that very much exist to take advantage of that ignorance, whether its payday lending, lotto, casinos, etc. I’m not blaming the businesses, but at the same time, those businesses are not beyond reproach either. They don’t exactly go out of their way to educate or disclose to people the true costs, odds, etc. - not in terms most uneducated people can easily grasp.

Ultimately, I am an individual rights kinda guy - govt should stay out of our hair and stop trying to redistribute our hard-earned dollars (at least not any more than it already does). But, education, disclosure, some measure of regulation, and real (not political or arbitrary) enforcement of the laws and regulations, can go a long ways towards helping to level the playing field. And I believe a level playing field should be an American right.

Working Poor Says:
April 26th, 2007 at 9:05 pm

I’d love to be reply but the blog owner is censoring my comments and will undoubtedly remove this when he sees it.

Working Poor Says:
April 26th, 2007 at 9:07 pm

Sure, I see opportunity all over the place. But it usually requires money and/or education to exploit it profitably. I have had business ideas (local) and watched helplessly as others with money implemented them successfully.

Do Payday Loans “Victimize” People? at Bankruptcy Law Network - Real Lawyers, Real Solutions Says:
April 26th, 2007 at 9:58 pm

[...] Over at AllFinancialMatters, a post about personal responsibility when it comes to payday loans. Though the author (someone with whom I usually agree) is clear that he dislikes payday loans, he does say [...]

JLP Says:
April 26th, 2007 at 10:02 pm

Working Poor said:

“I’d love to be reply but the blog owner is censoring my comments and will undoubtedly remove this when he sees it.”

I haven’t censored ANY of your comments. It’s not my policy to censor comments unless they are incredibly rude or have bad language. I don’t censor for difference of opinion.

My spam filter is catching your comments and throwing them into my spam folder for some reason.

Free Money Finance Says:
April 27th, 2007 at 5:19 am

Star Money Articles for the Week of April 23

Here are interesting posts and news this week from the MoneyBlogNetwork members and beyond: Consumerism Commentary says he buys generic and store brands sometimes. AllFinancialMatters asks if payday loans victimize people. MightyBargainHunter details h…

» Weekly Blog Roundup on Consumerism Commentary: A Personal Finance Blog Says:
April 27th, 2007 at 1:02 pm

[...] Do Payday Loans “Victimize” People? Payday Loans are bad ideas, but are they victimizing customers, or should customers take full responsibility? Responsibility must be shared between companies that should operate in an ethical manner and not take advantage of people in difficult positions, and customers who must be as educated as possible about whatever product or service they’re considering. [AllFinancialMatters] [...]

» Brief China Notes and Weekly Roundup on Blueprint for Financial Prosperity Says:
April 28th, 2007 at 8:39 pm

[...] JLP discusses his disdain for both payday loans and the implication that borrowers are victims and not willing participants. I totally agree. [...]

James Says:
April 28th, 2007 at 10:54 pm

Do they victimize people…

In a word. Yes

Its a no-brainer.

lmedsker Says:
July 3rd, 2007 at 2:37 pm

Just came across this discussion and realized people don’t understand the product. Here’s the thing…payday loans cost $15 per $100. Clear, straightforward, no hidden fees, etc. Bouncing a check (at my bank anyway) costs $39. Late fee on a credit card is $39.

If someone takes out a payday loan to avoid these other high fees, they aren’t a “victim”, they’ve actually made a rational decision about what will cost them more.

People are stupid. If they had a cheaper way to get a few hundred bucks, they’d find it.

lmedsker Says:
July 3rd, 2007 at 2:38 pm

Mean’t to say “people aren’t stupid”…

Payday loan Says:
November 29th, 2008 at 4:34 pm

Payday loans are a great way to help those who need a little extra cash for the holidays.

Loans Says:
November 29th, 2008 at 4:55 pm

I think the problem is that people are not informed about all the different types of loans there are and how they each work. Tbe best thing to do is to get all the informations possible avaible and then take out a loan.

personal loan companies Says:
December 13th, 2008 at 11:13 am

i think payday loans are a great financial resource when used wisely and paid in a timely manner. they really helped me when i needed cash fast for an unforseen emergency that came up and i still had a few days until i received my next paychceck. the application process was simple, they didnt check my credit, the rates were very affordable and the best part is its confidetial so no one has to know your applying for one.

Dan Kooper Says:
June 18th, 2009 at 8:32 pm

I think payday loans are perfectly fine. Everyone says interest rates are bad.

I have a bank of america credit card - my interest rate is 30% and that is still perfectly legal for them to do. Interest rates on payday loans never come close to that!

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Do Payday Loans “Victimize” People?