The Milwaukee Journal-Sentinel ran an article yesterday about political contributions from the payday loan industry and how they might influence attempts to regulate the industry.
They quoted Rep. Pedro Colon (who received no such contributions) saying: "If you make these guys disappear, you'll have bookies making loans - because banks aren't going to make these loans," he said.
Actually, most people are better off borrowing from bookies or loansharks (assuming they pay the loan back on time) -- they charge much lower interest rates than payday lenders, and they may offer value-added services to good clients.
Many years ago, a relative of mine borrowed money from an unlicensed, locally-based financial services entrepreneur when she was a struggling single mother. She brought a list of her personal property that could serve as collateral. He let her keep her things, saying that anyone who took the time to itemize their property was a good risk. She always made her payments on time. When her crazy and hostile landlord locked her attic storage space, she went to the local financier in a panic, saying that she had lost access to all of the items she listed as collateral. He told her she was a good customer, and that his business was pro-family, and that he would talk to the landlord for her. She never had trouble with her landlord again.
You won't get service like that from a pay-day loan establishment.
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4 comments:
What's not to like?
If a person uses a pay day loan properly they can be a service. Borrow small amounts over a very short time and the pay day loan place can help instead of hurt.
The problem is when people borrow large amounts over a long period of time. If they do that, more often than not, they are doomed.
The "service" is usually a rip-off. I went into one of those places once with a friend who wanted to cash a payroll check (from the State, back when they were solvent) over the weekend, rather than waiting for her bank to re-open on Monday, and the percentage they took was exhorbitant. You don't notice so much with a small amount, but those add up also, if you use their "service" on a regular basis.
Jill, the person needs to learn to shop. I know that wal-Mart cashes checks for about $3. There are other places as well.
Should they be regulated- yes, should they be shut down, no.
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