To all you folks in a huff about payday loans and the companies that provide them, let's take a hypothetical situation and see which makes the most sense:
I work retail at $9/hr and get paid every two weeks. I have a credit card with a limit of $500. After paying for rent, food, gas, insurance, etc. there's never much left of my paychecks. Say one day my car breaks down and, in order to get to work to keep my job, I've got to get it fixed immediately. The repair bill comes to $900 and, even if I max out my credit card, I'm still short $100 and don't get paid for a week; what do I do?
Write a bad check - If I bounced a check to the repair shop, my bank would charge me $35 NSF fee. The repair shop would probably add another $25 to re-submit my check. Total cost=$60
Overcharge my credit card - If I went over my credit card limit, Chase would charge me $39 (and probably raise my interest rate to the max.) Total cost=$39 (and a ding on my credit report)
$100 payday loan - I live in Washington State, our laws allows a maximum fee of $15 to be charged per $100 borrowed for two weeks. Total cost=$15 (We've got a winner.)
So, I get a payday loan for $100, get my car, and pay back $115 on payday. Done.
All of this talk about high APRs is only because current laws require payday loan companies to describe them as annual percentage rates rather than as "fees" which would be more accurate. Banks and credit card companies are not subject to this requirement.
Sure payday loan companies want your money, but anyone who thinks other for-profit companies are in business for anything other than making a buck are delusional. Payday loan providers are providing a service that people are willing to pay for. Some folks will abuse it, sure, but that's going to happen with anything. No business "really want(s) to help you".
There seems to be a lot of misplaced anger aimed at "those people" in these comments. You should be angry at whoever's responsible for your 401k losing 80% of it's value in the last year. I doubt they're hanging around the corner store buying smokes and beer.
I work retail at $9/hr and get paid every two weeks. I have a credit card with a limit of $500. After paying for rent, food, gas, insurance, etc. there's never much left of my paychecks. Say one day my car breaks down and, in order to get to work to keep my job, I've got to get it fixed immediately. The repair bill comes to $900 and, even if I max out my credit card, I'm still short $100 and don't get paid for a week; what do I do?
Write a bad check - If I bounced a check to the repair shop, my bank would charge me $35 NSF fee. The repair shop would probably add another $25 to re-submit my check. Total cost=$60
Overcharge my credit card - If I went over my credit card limit, Chase would charge me $39 (and probably raise my interest rate to the max.) Total cost=$39 (and a ding on my credit report)
$100 payday loan - I live in Washington State, our laws allows a maximum fee of $15 to be charged per $100 borrowed for two weeks. Total cost=$15 (We've got a winner.)
So, I get a payday loan for $100, get my car, and pay back $115 on payday. Done.
All of this talk about high APRs is only because current laws require payday loan companies to describe them as annual percentage rates rather than as "fees" which would be more accurate. Banks and credit card companies are not subject to this requirement.
Sure payday loan companies want your money, but anyone who thinks other for-profit companies are in business for anything other than making a buck are delusional. Payday loan providers are providing a service that people are willing to pay for. Some folks will abuse it, sure, but that's going to happen with anything. No business "really want(s) to help you".
There seems to be a lot of misplaced anger aimed at "those people" in these comments. You should be angry at whoever's responsible for your 401k losing 80% of it's value in the last year. I doubt they're hanging around the corner store buying smokes and beer.