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Why are payday loans a real killer? Is it because you think short-term, high-interest loans to people with poor credit is bad for the people with poor credit,
by stvswn 11y ago
Why are payday loans a real killer? Is it because you think short-term, high-interest loans to people with poor credit is bad for the people with poor credit, or are you OK with it in principle but think they should be more upfront about some of the shady things like hidden fees, deceptive tactics, etc.?
- tim333 11y agoSlightly off topic but from my experience in the UK the problem tends more to be 35% credit card interest. Payday loan people like Wonga generally won't lend to the seriously poor - they make their money from generally solvent people who've had something like a boiler pack up needing replacement.
- MBCook 11y agoBingo. I used to have a job he payday loan industry in the US. The truest poor would be terrible clients because they'll never pay you back. And since you only lent $300 you'd lose more than that trying to collect with a lawyer (ignoring the fact they can't pay in the first place). People who can manage their money up have a sudden need aren't good either. They'll take the loan, pay it back, and that's it. You made $60 and nothing else. The customers they want are on the edge. They have enough money to be able to 'rollover' the loan (extend another 2 weeks for a fee) but not actually pay it off. Over time the fees add up and they're paying you more, but you don't want them to totally default. At $60 + fees every two weeks it doesn't take long to make back the original $300 and then you're printing money. Yes these can be people right on the edge of total poverty. It can be people who have enough money but are irresponsible and use payday loans to fill gaps but aren't in serious trouble. Sometimes it's people who make a ton of money but are up to their eyeballs in debt and can't fill the credit cards up kore.