Trending: Payday Loans, a predatory industry
Payday Loans, a predatory industry
Payday loans have been around for as long as I can remember, but there is a common misconception -that only poor people or lazy people will opt for this option. It is also very well known that this form of a personal loan was created to exploit the needy. Most people never pay off the loans because of the extremely high-interest rates – as much as 400% annually. Known faces like Tyler Perry and John Oliver have made ‘Payday loans’ a hot topic. Let’s get right to it, shall we?
Let me start by saying the idea to write about this topic was conceived with all kinds of people in mind – The old, the young; the poor, the rich; white, green, and yellow. This is a situation that affects us all. There are over 70 million Americans who rely on payday loans and alternative banking services to make ends meet. Are you one of them? Have you been there?
A notable figure, Tyler Perry, who has had his own share of bad luck shares a documentary he named “Spent: Looking For Change.” He journals the lives of four American families while dispelling the common misconception that only poor, lazy and uneducated people are affected by payday loans.
According to John Oliver of the ‘Last Week Tonight Show’, “1 in 20 Americans have taken one out at some point.” It is a 9 billion dollar industry, he emphasizes. Okay, read this – he reveals a shocking detail. There are more payday loans than Starbucks or McDonald’s, they exist in every street corner. For an industry that has only existed for 20 years, Payday loans have managed to dominate the entire nation. John Oliver jokingly says that payday loans have given Ebola a run for its money with the rate at which it has spread.
All kidding aside, if you think you have avoided this all your life and will never be in this position, think again. Perry recounts the story of a woman who has several degrees, works as a nurse and is a single mother. One day she is living well, and the next day her mother is ill with cancer. She gets a payday loan she may never pay off.
I know a story of a woman whose daughter and son-in-law dies in a car crash and suddenly she becomes a mother to her 5 grandchildren who eat a lot. She has to clothe them and give them basic amenities – a situation that was brought about so suddenly. She was determined to make it on her own so she pawned her things and took out four payday loans while working two jobs. Does she sound like a lazy person to you?
While financial literacy seems to be at the root of this problem, people like Montel Williams parading around a misleading commercial for ‘money mutual’ is why certain groups like African-Americans have fallen for this trap, that John Oliver labels ‘a recycling machine.’ Williams says I should, so I will.
When was the last time he took out one of these payday loans? A TV show host becomes a financial analyst! And get this, did I say as high as 400%, Nah. Some of these companies have gone rogue, they legally charge as much as 1900% according to Oliver.
Oliver compares payday loans to ‘Lays’ potato chips, “you can’t get enough and they are bad for you.” These are not short-term loans, they are designed to make you keep paying on the same loan by charging high interests. Unfortunately, this industry is not going anywhere soon.
Payday Loans Set Up
Let’s look at some examples of the way this shady industry is set up. The vice-president of Cash America – one of the largest payday loan companies is also the elected chairman of the state of Texas’ finance commission – the body that regulates the payday loans industry in the state of Texas. Sounds very shady to me, what do you think?
What does this mean? There is always a loophole. This legal form of loan shacking will continue on, but you can protect yourself.
Payday Loans Dos and Don’ts
- Pawn or sell things. Do you have items around that you can live without?
- Get welfare. Yes, I said it. Put your pride aside and do the one thing that you won’t regret. If and when you get back on your feet, give back to your community.
- Get community involvement. There are many community programs that may be able to help. Go to your local community bank to explore some unconventional loan options.
- If all else fails, I guess you can look at the option of prostituting yourself. Just joking, but really consider it before a payday loan.
This brings me to the end of this lengthy topic. I can go on and on, but I think you get the point – avoid payday loans!
Meet the Author
Hey, I'm Neema. A mom, wife and self-proclaimed foodie. Lately, I've seen such a HUGE upward trend in blogging. Without hesitation, I decided to pack all my knowledge of parenting, recipes and more in this tiny little site.Learn more
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