More a noose than a lifeline.
Beats going to “Vito”. At least your legs will be intact if you don’t pay.
I knew a poor woman who took out a 50 dollar short term loan from them. Within a year she was in debt to them for 400 dollars on that 50 dollar loan.
Another went to a check cashing and loan company in another state as she was short of cash. She needed 100 dollars, but balked when they demanded a check for 145 dollars before they would give her the 100 dollars.
A better option than a payday loan is to go to a finance company, where you can get an actual loan, but with less interest and a reasonable monthly payment.
I think you’re wrong. I have on occasion used them and they saved me a lot of heartache and grief. I realize that some people lose their propert when they can’t repay the loan. But for many, they are the only place which would help.
Reason for the higher rates is that the rate of default is much higher than more traditional loans. So these "payday loans" outfits are taking a much higher risk than traditional banks that are more discriminating about who they loan money to. Because the more traditional banks are more discriminating, they have less defaults and so can charge lower rates.
The real life lesson in all of this is that there are consequences for defaulting on your debts and ruining your credit.
I'm reading a biography on Harry Truman right now and he had partnered with somebody in 1919 on a men's clothing store. When the store failed, he had the option to declare bankruptcy. But instead, he worked out payment plans with his creditors and was still making those payments 20 years later, when he easily could have walked away in a bankruptcy filing. I believe he shouldered some of his partner's debt as well.
The benefit to Harry Truman was that his credit was always good and never had to borrow money on onerous terms.