I was thinking that when the economy is down, crime usually sprints up in step, it only makes financial sense. We must watch to see any coming correlations between the communities and the businesses on them.
A key feature to a payday loan, they serve a community that banks do not serve. Usually those patrons are in lower developed communities. No jobs, education or sense of family can lead to crime increases and financial decisions that are based on survival rather than perfect credit scores.
I work with online payday lenders, and the bad press the media is giving is unfair. Are the loans ideal? No. Are they better than robbing an old lady or selling drugs yes. Many argue the loans are cheaper than going to the bank and writing a bad check or getting a late fee on a credit card.
Two things: 1. Ian - I think your crime concern is valid. When denied credit pawn shops are an option of last resort. When you run out of items to pawn what do you do? Steal items to pawn is an obvious "solution". Most payday loan customers are honest people who would never commit a crime - but when they find their backs against the wall committing an act they would never normally do may be a irresistible temptation.
2. I would like to see the methodology behind the Iowa Division of Bank’s study. In my store we have a very high number of customers who take out one loan and never reborrow – or only borrow a few times per year. Were these “inactive” customers counted In the stats? I suspect doing so would greatly change the result. My second question is if so many people are taking out a large number of loans per year why don’t they simply ask for an extended repayment plan? Based on my intuitive sense of the market these numbers do not sound reasonable.
Jon Schultz
· 1 year ago
The most important statistic is contained in customer satisfaction surveys, which show that the overwhelming majority of payday loan borrowers consider the loans to be a useful financial service. See http://www.cfsa.net/customer_demand.html
That tells you a lot more than the APR or statistics on how often people use the service. If someone uses the service frequently that doesn't mean he has been preyed on, as the critics claim, it could just mean he is having a hard time making ends meet and uses payday loans frequently to save money on bank overdraft and other late-payment fees which can have an APR 20 times higher. See http://www.cfsa.net/OverdraftProtection.html
The customer satisfaction surveys sure seem to indicate the latter.
All Comments
A key feature to a payday loan, they serve a community that banks do not serve. Usually those patrons are in lower developed communities. No jobs, education or sense of family can lead to crime increases and financial decisions that are based on survival rather than perfect credit scores.
I work with online payday lenders, and the bad press the media is giving is unfair. Are the loans ideal? No. Are they better than robbing an old lady or selling drugs yes. Many argue the loans are cheaper than going to the bank and writing a bad check or getting a late fee on a credit card.
Ian
Easy Cash Advance Loan Applications
1. Ian - I think your crime concern is valid. When denied credit pawn shops are an option of last resort. When you run out of items to pawn what do you do? Steal items to pawn is an obvious "solution". Most payday loan customers are honest people who would never commit a crime - but when they find their backs against the wall committing an act they would never normally do may be a irresistible temptation.
2. I would like to see the methodology behind the Iowa Division of Bank’s study. In my store we have a very high number of customers who take out one loan and never reborrow – or only borrow a few times per year. Were these “inactive” customers counted In the stats? I suspect doing so would greatly change the result. My second question is if so many people are taking out a large number of loans per year why don’t they simply ask for an extended repayment plan? Based on my intuitive sense of the market these numbers do not sound reasonable.
That tells you a lot more than the APR or statistics on how often people use the service. If someone uses the service frequently that doesn't mean he has been preyed on, as the critics claim, it could just mean he is having a hard time making ends meet and uses payday loans frequently to save money on bank overdraft and other late-payment fees which can have an APR 20 times higher. See http://www.cfsa.net/OverdraftProtection.html
The customer satisfaction surveys sure seem to indicate the latter.
Payday loan is a small, short-term loan, which is intended to cover a borrower's expenses until his or her next payday. The Payday loan serves the lender as an advance on the salary and gives a boost of cash when she/he requires it. The borrowed money can be repaid when an individual can afford to do so, namely on the payday. In this way, the Payday loan offers a means of helping with emergency cash, or helping to bridge the gap between payday and an urgent expense. It is always advisable to use the Payday loan as they are designed to be used. It means, the loan must be used for short-term credit needs only and the borrower must repay the same on the. This loan should not be used for long-term credit needs or debt problems.