Ok I just read an article completely bashing the existence of payday loans. The article described how payday loan lending is contributing to the major issues in the mortgage lending space. Although I agree with some monumental issues presented by this type of lending, I think it is unfair to zero in and make the payday loan industry out to be the fire breathing demon released from hell to drive personal finance into the ground. The truth is there are some very basic market principles at work here. Consumers will find a way to get what they need.
The problem is way beneath the surface. Problems ranging from lack of personal financial responsibility and education, the high cost of gas, health care and anything else you can think of. Unfortunately, the problems low income consumers face can't be attributed to any one area. It is a complex issue and can't be blamed on the payday loan industry alone.
One thing I would be extremely curious to know is of the thousands of payday loan customers out there, how many of them have actually had a negative experience. Is it really as bad as the news makes it out to be? Another lingering question in my mind is what consumers would do if there were no payday loan companies. Would banks provide credit facilities design for the underbanked or unbanked? I'm no expert but I think not.
At the end of the day, there are bad payday loan companies out there that prey on unknowing consumers. But then again there are companies in every industry that do not have society's best interest in mind. Lenders provide desperate people a quick and simple solution. I'm not saying that is the fix to all financial problems in the unbanked community but it does provide a short term solution.
- Payday loans are not evil
- If you need emergency cash, make sure you exhaust all avenues before taking out a cash advance. Borrow from friends or family, work more hours to earn overtime and stop spending more money then you have.
- Get help with your personal finances. Read as much as possible. There are endless resources online.
- Ask questions. Most lenders will help you understand the basics. It doesn't hurt to ask.
- Prevention is the key. Do everything in your power to gain control of your finances and save. Pay yourself first!
Randy San Nicolas is the managing partner of Launchpad Marketing, LLC and owner of http://www.fastmoneyfinder.com - The site provides consumers with a payday loan matching making service designed to connect lender and borrower.