They prey on those who need financial assistance and education the most. Offering money with high interest rates attached to it. They offer no financial advice and serve no real purpose, besides preying on the misfortune of others.
Pay Day Loans become a cycle. Once a loan is taken out, the interest makes it very hard to get out from under the loan. Next thing you know you are giving the loan place your whole pay check to pay for the loan, or loans, you have taken out. Then you have to take out more loans just to survive, until the next pay day when you use that check to pay off the loan you took out the pay day before. It's a trap!
All you are doing is handing over YOUR hard earned money!
I know times get tough and we have to do what we have to do to make it to another day, but what good do Pay Day Loans do? They don't teach people about financial management. They don't offer a way out of debt. They do continue the cycle of poverty.
Look around and see where the Pay Day Loan places are. Who is their target? More often than not, you will find Pay Day Loans places in areas where the community is already in financial trouble. You find them in minority neighborhoods. You find them in cities close to rural areas. Why? Because those are the people who need financial education the most due to their low economic standing.
The New York Times had an article on Pay Day Loans awhile back and a few parts really stood out to me:
"While such lending is effectively banned in 11 states, including New York, through usury or other laws, it is flourishing in 39 others. The practice is unusually rampant and unregulated in New Mexico, where it has become a contentious political issue. The Center for Responsible Lending, a private consumer group based in Durham, N.C., calculates that nationally payday loans totaled at least $28 billion in 2005, doubling in five years.
The loans are quick and easy. Customers are usually required to leave a predated personal check that the lender can cash on the next payday, two or four weeks later. They must show a pay stub or proof of regular income, like Social Security, but there is no credit check, which leads to some defaults but, more often, continued extension of the loan, with repeated fees.
In many states, including New Mexico, lenders also make no effort to see if customers have borrowed elsewhere, which is how Mr. Milford could take out so many loans at once. If they repay on time, borrowers pay fees ranging from $15 per $100 borrowed in some states to, in New Mexico, often $20 or more per $100, which translates into an annualized interest rate, for a two-week loan, of 520 percent or more."
I can't place all the blame on Pay Day Loans. I can't place all the blame on the people who use them. I can't place all the blame on schools. I can't place all the blame on society for not properly educating about money. I can't fully blame society for the cycles of poverty; making Pay Day Loans appealing.
A piece of the blame should be shared. People have to do what they must to survive and Pay Day Loan place take advantage of this. The people who use Pay Day Loans need to develop an exit strategy, no matter how bad their current financial situation happens to be. Have a plan for getting out from under the loans and building a strong financial foundation. Find organizations or individuals that educate AND help you build this foundation. Take control of YOUR money!
As the old saying goes, "Give a man a fish and he will eat for a day. Teach him how to fish and he will eat for a lifetime."
If you find yourself in Pay Day Loan hell or are considering using Pay Day Loans, let us help instead!