Although I have never taken out a payday loan I can’t say there were not points when I was a younger (and less responsible) where I probably would have. And I most likely would have dug myself a hole in doing so.
Nonetheless, you have some very valid points. I’m sure you have helped many people who did not have any alternative get out of some tight spots and your business has a place and proper function in society (IMHO). I find it interesting that PDL firms are vilified when not used responsibly by the customer but when banks issue credit cards with absurd limits and the cardholders run up insane debt that they can never repay, the banks are never faulted. I know people like this and they can barely make their minimum payments and keep a roof over their heads. They are financial zombies whom despite having good incomes can barely put gas in the tank because they have tens of thousands of dollars in CC debt.
Also, if you structured your business on an APR schedule, let’s say at an annualized rate of 25% (around the % of a cash advance on a CC to someone with iffy credit), on a $50.00 loan for one week, you would make less than twenty cents in interest. Not worth the time to handle the paperwork or mitigate the risk of putting cash in the hands of someone who needs that little money that badly in the first place. I would venture that the loans you are making would be considered “extremely” high risk and can’t help but wonder, if someone stiff’s you for let’s say $100 bucks, is it even worth it to pursue in collections?
In states that limited the APR to 36%, I could make about $1.38 on a $100 loan for two weeks. I shouldn’t have to say it...but no money can be made on a 36% APR even though 36% sounds like it would generate a lot of money. So I cannot understand how there are those that think a 36% APR is fair and reasonable. Why not force steakhouses to sell steak dinners with all the trimmings for $2?? Seems just as reasonable.
If you were young and came into my office, I would turn you around and shove you back out the door. I have found in my 20+ years experience young people (18-23 years old) are completely worthless in handling their finances.
I noticed that someone earlier in this thread said they were on fixed income. Again they come into my office, I shove them out the door behind you. I quit taking fixed income accounts years ago...most were truly awful to deal with. One reason, they know if they do not pay, you cannot garnish a gov’t check, you essentially have no way to get your money back.
So even payday loans, at least mine, do not service the needs of all people.
Yes, the biggest problem are those that abuse payday loans. Many years ago I knew guy that went out and got 17 payday loans going at one time. I can’t even imagine that. I do not know you or what you make, but I can guess with 99.99% certainty that if you did just ONE payday loan it would not financially ruin you, it would be a small blip on your debt radar. I personally think more people would use payday loans but the news media, Dems, consumer groups have stigmatized it and demonized it so much, people do not really understand what is going on. Some thing if they came into my office I would charge them 417% interest not understanding the difference between interest rate and APR.