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RSSLetter: Advertising Payday Lender Rates Would Help
January 23rd, 2012
Irate letter-writer challenges the payday loan industry
I am offering the Avalanche-Journal, creator of the Savvy Shopper, a golden opportunity to deliver on its aspirations of serving the local public by providing pertinent education, in this case the subject of Payday Loans.
Loan charges
My inquiries among local outlets reveal that payday lenders can charge between $21 and $25 for a $100 loan, payment due by the borrower’s next payday. That’s 21-25 percent interest over the term of the loan. (What other way can a businessman turn $100 into $125 in less than a month?) The equivalent in terms of APR is too stratospheric for me to calculate.
Interest rates
The Avalanche-Journal addresses the issue of high payday loan interest rates in a Jan. 13 editorial: “Educating consumers as to why they shouldn’t make bad financial decisions is a better investment than regulations that protect them without addressing their ignorance. Knowledgeable individuals always make better decisions for themselves than any army of enlightened technocrats could make for them.”
Publish the interest rates
If the editors are sincere in their assessment of the problem, let them publish the interest rates payday lenders charge. This will give persons in need of loans a good advance idea of what the cost will be for using payday loan services, improving the likelihood of sensible decisions. Surely the editors will not be unwilling to use the Avalanche-Journal to take this small step in contributing to consumers’ education, if they truly believe lack of education is the problem.
It’s expensive
Meanwhile, payday lenders’ policies exemplify the adage “It’s expensive to be poor.”
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