Payday loans are considered by most consumer advocates as the financial equivalent of a zombie virus.
They just eat income and create a viciously repetitive cycle that consumes borrowers money; a bit like zombies consume brains and human flesh while infecting other people to become zombies.
However, these allegations are simply wrong. While no one really tries to become a zombie in most fictional stories, when it comes to payday loans, people are willing to borrow them.
Why would people borrow something that hurts them? It turns out that most people are not hurt by payday loans because payday loans actually help people. However, misinformation has portrayed a very inaccurate representation of the payday loan industry.
Jamie Fulmer, senior vice president of public affairs at Advance America, told payday-king.com that disinformation frequently compares the legitimate and licensed payday loan industry with check cashiers, pawnshops and non-credit lenders. regulated.
“These misconceptions, and the more insidious myths spread by the opponents of our industry, have led to a number of short-sighted conclusions about how this service works and the role and value of short-term credit in the US. United”.
Most of the stereotypes (generated by anti-payday loan activists) of payday loan borrowers tend to portray them as low-income, unemployed minorities who do not have a bank account.
It could not be further from the truth.
The truth by numbers
According to a 2010 Personal Money Network report on the entire payday loan industry, 96.3 percent of borrowers were employed and 99.24 percent used a current account to secure their payday loan. Clearly, being both employed and having access to a bank means that one of the key stereotypes of the anti-loan loan industry is inaccurate.
Another common mistake that anti-payday advocates are promoting is that the industry is attacking the brave men and women of the armed forces. Unsurprisingly, this assertion is also false.
Only 0.12% of the borrowers were serving military members. This can be attributed in large part to the Bush Administration’s Military Loans Act, which limited the proximity of payday lenders to military bases. The arguments about the financial compensation of the bravest men and women of the nation, it is clear that if the payday loan lenders were targeting members of the military, then their targeting methods need improvement.
Low-income stereotypes always go hand in hand with tenants. After all, houses, being the largest slice of the American dream, are also one of the highest signs of wealth.
It turns out that nearly 75% of payday loan borrowers owned property; far from the destitute and helpless nation. More specifically, this data came from 2010, the strongest collapse of the real estate market and the crisis of foreclosures, while fewer people had any housing at all.
Stereotypical expectations about race and ethnicity are just as inaccurate as the assets of regular borrowers.
Far from being minorities, most payday loan borrowers are young white women, according to data from the Pew Charitable Trust. For all the allegations that the payday lending industry was prey to the color minorities in the downtown area, it is clear that this is an industry that also has a white clientele – and proportionally important.
However, that does not mean that the industry itself is massive.
Only 5.5% of US adults have used a payday loan in the last five years. Barely an epidemic of predatory lending and certainly not as likely as the student debt crisis.
So why all the hate against the payday loan industry?
Blinded by hatred
It seems clear that this is a little more than a continuation and a fragment of the feeling of the anti-financial industry. While large banks “too big to fail” should be held accountable for the role played in the Great Recession, but the payday loan industry is far from acting in the role of banks.
“We have found that in general the most virulent critics of our industry are those who have never used our service,” said Fulmer. “This is in stark contrast to our overwhelmingly positive customer ratings – in fact, 96% of my business customers rate their experience as good or excellent in a recent customer satisfaction survey.”
“The cash advance works for them,” he said.
The anti-payday loan feeling is also probably generated by the bad actions of a handful of bad lenders.
As with all industries, some rotten apples can ruin the pack. Point in the case, BP, which has become a family name thanks to its blatant incompetence in causing the oil spill that devastated much of the Gulf of Mexico and the dependent economies of the navy of a large number of states coastal.
Despite this event, the oil industry does not have exactly monthly oil disasters. More specifically, oil is still the engine of industry and energy. While the world can argue for decades on whether to do more to get away from oil dependence, the fact remains that oil is as much a part of everyday life and everyday products as money and loans.
“Any form of credit can be misused or abused, and every industry has good actors and bad actors,” said Fulmer.
Just because some payday loan lenders operate illegally or unlicensed on the state’s borders does not mean that the product itself should be illegal. According to this logic, the mortgage loan abuses of some mortgage lenders should mean that from now on all mortgages will be prohibited. It’s far from logical, far from sound, and far from practical.
People will still need mortgages just as much as they will always need quick, short-term financing like payday loans.
To apply for and borrow money from authorized and trusted lenders, you can find an app here.
Payday loans are simply a way for people who would not otherwise have access to credit or loans to get financing in time for their needs. And yes, people “need” short-term money for their daily expenses. The results of the Pew Charitable Trust show that 69% of payday loans are used for regular expenses, rent / mortgage and food.
The anti-payday loan feeling will not go away soon. As long as the abusive lenders still exist and as the laws on payday loans remain as chaotic as a field trip to a candy factory, there will be mood shifts to the lending industry. Anti-payday loan activists should recognize that payday loans from authorized lenders actually help people. Perhaps once they do, they can approach legitimate authorized lenders to create a more comprehensive set of laws that will provide a clear demand among the American people.