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What test? Please define "able to pay the loan back". AFAIK, payday loan companies do require the borrower to be employed, hence the name "payday".
by jpindar 8y ago
What test? Please define "able to pay the loan back".
AFAIK, payday loan companies do require the borrower to be employed, hence the name "payday".
- fzeroracer 8y agoBefore I delve into my argument, you would actually be wrong. Names can be tricky, payday loans are typically just short term loans. You don't necessarily have to show current employment. Now, let me give you a hypothetical: Let's say for example you have someone asking for a payday loan of $100. You are not 'required' to determine if someone can afford to pay that back or not. You offer them the loan, they take it. Turns out they can't afford to pay it back, so you sue them for over 36 times the amount. Now imagine that's not actually a hypothetical [1]. That's one real-world example of how payday loans are predatory. The incentive is to loan to people who can't pay it back, because you earn more in garnishing their wages than you do from the initial loan. A second example is imagine you offer them a loan for $100. Then you offer them a deal: I'll give you $200 for half the (initial) interest rate. They take it because you've convinced them it was a good deal, but they could only actually afford $100 and not $200. Now we're back to garnishing their wages and getting rich off of it. This is why those regulations exist. This is an actual problem, not a hypothetical. The incentive for payday lenders is to scam people out of money because that's their entire business model. [1] https://www.theguardian.com/us-news/2015/may/09/us-payday-loans-crisis-borrow-100-to-make-ends-meet-owe-36-times-that-sum https://www.theguardian.com/us-news/2015/may/09/us-payday-lo...