Far from doing people with bad credit a charitable service, payday loan places are business that often seek to maximize profits on the back of people that have no where else to go. The arguments for payday loan places are similar to the arguments made for loan sharks.
Payday loans places charge up to 400% annual interest on a loan. While they don’t run a credit check, they do require that the person have a job and require a post dated check. So statements that they loan to anyone aren’t accurate.
More telling is that Payday loans places don’t allow you to pay down principal over time. The loan is for two weeks, if after two weeks, you can’t pay only part of it back and lower your interest cost. You have to roll over the whole thing and get charged interest on the whole thing.
If they actually cared about the borrowers, they would change that.
That’s just the legal stuff.On top of that, there are abuses by payday loans places. Plenty of accounts in which they violated collection law or tried to cash a check several times in one day running up huge bounced check fees for the borrowers.
Do anything and everything you can, including simply not paying non essential bills for a month or two before going to a payday loan places. It just makes more financial sense.
There is no question that there are payday lenders out there that abuse the people they lend to and also the system in general. There is a need for payday loans however, as the article said, for people who have no other access to credit.