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re: Payday Lending
Posted on 2/16/16 at 11:19 pm to TigerGM
Posted on 2/16/16 at 11:19 pm to TigerGM
You can explain it theoretically as much as you want. I understand the economic theory as well as anyone but economics assumes an understanding of the facts of the situation.
The reality is that the people who use payday loans have no concept of interest. All they know is they have a a bill due tomorrow and need cash now. Their debt then snowballs and they can't get out of it - because they don't understand the principles of interest. Even when they make a payment, they don't know why the amount they owe hasn't gone down since the last payment.
There are a lot of financially illiterate people. Pay day loans abuse them. The economic purist has every right to plead "they should know what they are doing" but the reality is they do not.
The reality is that the people who use payday loans have no concept of interest. All they know is they have a a bill due tomorrow and need cash now. Their debt then snowballs and they can't get out of it - because they don't understand the principles of interest. Even when they make a payment, they don't know why the amount they owe hasn't gone down since the last payment.
There are a lot of financially illiterate people. Pay day loans abuse them. The economic purist has every right to plead "they should know what they are doing" but the reality is they do not.
This post was edited on 2/17/16 at 9:24 am
1
Posted on 2/17/16 at 9:41 am to lynxcat
I understand the image that many people have of these places, and I'm sure this conversation could go on and on, but I'll say this, many of these people are damned if they do and damned if they don't.
At the end of the day, this business offers people who truly want to just keep the lights on/feed their family and create a bridge between pay checks, the opportunity to do so. Nobody else offers them this opportunity. An individual can go and bridge that gap for a fee of $15 per $100 to be repaid in 2 weeks. That doesn't sound unreasonable to me, and in fact it sounds downright reasonable considering these people have a history of failing to pay their debts.
The fact of the matter is that many times these people continue to be irresponsible and end up in a sinking ship. I have a hard time blaming anybody else for that.
The "helpless" people that got "suckered" in to these payday shops are viewed as the victim, and the business is demonized. We take personal responsibility out of the equation and ignore basic economics.
It's not that I don't empathize with some of these people, it's that I just don't think there is any alternative outside of subsidizing poor decision makers with tax payer money and create a govt payday loan program, and I can only imagine the abuse and the shitshow of a program it would create.
At the end of the day, this business offers people who truly want to just keep the lights on/feed their family and create a bridge between pay checks, the opportunity to do so. Nobody else offers them this opportunity. An individual can go and bridge that gap for a fee of $15 per $100 to be repaid in 2 weeks. That doesn't sound unreasonable to me, and in fact it sounds downright reasonable considering these people have a history of failing to pay their debts.
The fact of the matter is that many times these people continue to be irresponsible and end up in a sinking ship. I have a hard time blaming anybody else for that.
The "helpless" people that got "suckered" in to these payday shops are viewed as the victim, and the business is demonized. We take personal responsibility out of the equation and ignore basic economics.
It's not that I don't empathize with some of these people, it's that I just don't think there is any alternative outside of subsidizing poor decision makers with tax payer money and create a govt payday loan program, and I can only imagine the abuse and the shitshow of a program it would create.
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