Wednesday, February 4, 2009

Payday Loans: Go Break Some Eggs

You love omelettes, admit it

Gareth Marples writes in his blog “The History of…” that payday loans have been controversial since their very inception in the early 1990s. Yet you’ve probably heard the old saying that you can’t make an omelette without breaking some eggs, right? Undertaking a faxless payday loan during a financial emergency will cost anywhere from $15 to $30 per $100 loaned (shop around), but the result is most often delicious peace of mind. Not having to worry about a vexing financial matter would be a welcome relief to anyone.

Yet the pro and con sides of the payday loan argument rage on with the heat of a commercial oven. In Cash Advance Mojo’s opinion, he would like to see logic to prevail in the face of evidence, but the Center For Responsible Lending doesn’t show you all the sides of the debate.

Too many cooks in the kitchen

Somebody around here must understand the true recipe for getting consumers out of short-term financial distress when emergencies rise like an uncooked loaf of bread. It’s full of promise uncooked, but most edible and nourishing in its ultimate form. The anti- and pro-payday loan cooks should have it out in the kitchen right now.

  1. Angry cook: "Payday lending across the nation is rife with abuse. These high-cost loans often lead consumers down the path to bankruptcy!"
  2. Sensible cook: Payday loans are designed for short-term emergency use. They are fast, convenient for those with less than perfect credit and discreet. Rates are set as they are to cover the risk factor involved.
  3. Angry: Payday lenders charge interest upwards of 391 percent or more annually!
  4. Sensible: These are not annual loans and creme brulee isn’t served tartare. See for yourself. If your lender charges $15 per $100, you’re paying a 15 percent fee. Anything else would be a fabrication, like snipe souffle.
  5. Angry: Payday loan stores target seniors and the working poor!
  6. an omelette

    Sensible: It’s check-cashing outlets that are typically located only in lower-income areas. Their customers don’t need a regular income source or bank account, which they do if they’re going to do business with a payday lender. Moreover, studies have shown that 90 percent of customers repay their loans on time and they are typically an educated lot. They know what they’re signing up for and repay their debts.

  7. Angry: Argh! But payday loan companies make millions off the poor!
  8. Sensible: Settle down, Flossie. Bruce Tunell, who is the Deputy Superintendent of the Arizona State Banking Department, says that "It's unlikely that payday lenders are targeting low-income people, because the usage of the payday loan cuts across the economic spectrum."
  9. Angry: Borrowers roll their loans over many times, digging themselves a deep hole!
  10. Sensible: I’ve already told you that 90 percent of borrowers pay their loans off on time. That isn’t rollover. Sorry, let’s be civil. Nicholas Boehler of Advance America in Tucson, Arizona says that "We've had thousands of customers use our service since we opened in 2000. Of those, only about 400 or so are active customers. Most people pay their loans and we never see them again.”
  11. Angry: Well, um, California wants to give consumers longer periods to repay loans and more disclosure information. Cash advance must be crooked!
  12. Sensible: Then why did California authorize them in July of 1996, saying that they were "secure, small emergency loans without the red tape?"

And the egg beat goes on

Who knows if our combative cooks will ever make an omelette together? Clearly, the payday loan issue is prone to heated debate. Marples goes into even more of the debate; you should check it out for yourself and decide whether payday loans are for you. Just remember, when you need emergency cash, it’s always nice to have an omelette in the pan. Because, you know, they’re tasty… ... click here to read the rest of the article titled "Payday Loans: Go Break Some Eggs"

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