Friday, March 1, 2013

PayDay Loans, Part N

A recurrent topic here at EE:  Payday loans.

A survey on why people use payday loans, from the NYTimes.

Money quote: 
The loans are typically viewed as helpful for unexpected bills or emergencies. But the Pew report found most payday borrowers are dealing with persistent cash shortfalls, rather than temporary expenses. Just 14 percent of borrowers say they can afford to repay an average payday loan out of their monthly budgets... Even though borrowers complained that they had difficulty repaying the loans, most agreed that the terms of the loans were clear. So why do they use such loans? Desperation, according to the report: “More than one-third of borrowers say they have been in such a difficult situation that they would take a payday loan on any terms offered.” 

So, the solution is obvious? Right? Take away from desperate people the only legal option available to them, forcing them to borrow from loan sharks. Wait, that can't be right. But it is true that using payday lenders is apparently NOT euvoluntary.

1 comment:

  1. I wonder where I can get money for an operation or buying a house in case my credit history is far from being perfect? Banks would refuse me, and the only option I know is bad credit loans. So if people had a choice, there would be some point to talk about it. But often situations arise when we are in need of some temporary cash urgently but do not have adequate funds.


Do you have suggestions on where we could find more examples of this phenomenon?