When you hear the words “Payday Loan” what comes to your mind?
- Do you think of an industry out there taking advantage of consumers?
- Or, do you think about an industry providing people with relief and peace of mind during this financial crisis?
Most people would say answer a. But is that true or do we need to educate ourselves regarding this part of the financial industry? Who are the people that need these payday loans and do they have other options?
According to www.census.gov the official poverty rate in 2010 was 15.1 percent, which was up from 14.3 percent in 2009. In 2010, 46.2 million people were in poverty, which was up from 43.6 million in 2009.
Those are staggering numbers. People are having a hard time making ends meet. From 2009 to 2010 an additional 2.6 million people were at poverty level. Where did they come from? Middle Class families? Low Income families? Who is out there helping them get back on their feet? The banks? With the foreclosures on homes, the increased account fees, overdraft fees and high credit guidelines… what do you think?
What sort of monthly expenses do all of us face? Rent/Mortgage, utility bills, insurance, car payment, food allowance just to name a few. If you are running out of money at the end of the month what would you sacrifice? Your electric bill? Your rent? Your car loan? Or just overdraft your bank account? All of those choices involve late fees or overdraft fees and may incur being harassed by credit agencies or having your electricity turned off, being kicked out of your home or having your vehicle repossessed. None of those sound like viable solutions to me.
According to www.wikipedia.org the definition for a payday loan is “a small, short-term loan that is intended to cover a borrower’s expenses until his or her next payday.” That is truly what a payday loan is there for. Many times you will hear payday opponents talk about high interest fees, but when you research these fees in comparison to bank charges and late fees of missing necessary payments and/or possible repossessions/foreclosures/losing electricity, going hungry etc. – which sounds better to you?
So before we judge the financial institutions giving payday loans or the people receiving such loans – let’s make sure that we look at the situation from all angles, and form an educated decision.