Payday Loans Are The Symptoms, Not The Problem
By Priya Jestin, Staff Writer
The authorities may have come out in full force against payday lenders. However, there is one simple fact that they have overlooked. No payday lender has badgered people to come to them and use their services. Payday lending does not involve shoving money down the pockets of unwilling people.
Only those people who need money urgently and have a regular job, through which they can repay the loan, are eligible for a payday loan. Of course there are people who find it difficult to repay their loans and fall into a debt trap. But that involves a deeper malaise — one of free spending without proper saving education. So when the authorities are trying to oust payday loan centers, they are trying to cure the symptoms of the problem and not its root cause. What is the need of the hour is to educate people on how to spend within their means and save some for a rainy day. Once that is done, payday loans will not seem like a big problem.
March 19th, 2007 at 2:13 pm
Great blog, thanks.
March 22nd, 2007 at 8:34 am
Federal Reserve Finds Payday Lenders are NOT Predatory
Donald P. Morgan of the Federal Reserve Bank of New York published his report on payday lending in the January 2007 Federal Reserve Bank of New York Staff Reports, no. 273
If you have the time and inclination to review the report you may find it interesting. It is available on the Federal Reserve Bank of New York website.
The key points are illustrated in the abstract found on page two of the report as seen below.
The abstract of the report states, ” We define predatory lending as a welfare-reducing provision of credit. Using a textbook model, we show that lenders profit if they can tempt households into “debt traps,” thatis, overborrowing and delinquency.
We then test whether payday lending fits our definition of predatory. We find that in states with higher payday loan limits, less educated households and households with uncertain income are less likely to be denied credit, but are not more likely to miss a debt payment.
Absent higher delinquency, the extra credit from payday lenders does not fit our definition of predatory.
Nevertheless, it is expensive.
On that point, we find somewhat lower payday prices in cities with more payday stores per capita, consistent with the hypothesis that competition limits payday loan prices.”
Always remember rolling existing payday loans can be a disaster financially. Please always borrow responsibly.
If you find that you are in a bind and are looking for a payday loan, consider http://aaapaydaycash.com . This lender is interesting because it is based in the US and is licensed by one of the states they operate in. You can actually call one of its team members to walk you through an application or you can apply online.
April 3rd, 2007 at 2:19 pm
Ideally, I think it is a good practice to educate yourself on all aspects of any financial decision, prior to taking on the responsiblity.
However, it seems that although these ‘quick fix’ loans boast to help those with an immediate need, there is also the sublime appeal to those 9-5 workers, whom fallen on hard times, seeking to supplement or bridge their paychecks, during desparate times (out of work during the course of the loan, illness, etc), and may find they can’t repay. Are there any helpful options for them.
REACHING FOR A SOLUTION:
Would anyone know how such vulnerable WORKERS could actually get themselves released from a PAYDAY LOAN, if they find themselves in such a deadly debt cycle?
I SUGGEST: When in need, run the other way from these ‘quick fix’ money sources-They are not here to help you.