Potpourri Blog

Online payday loans borrowers have rights. They have the right to know how much their loan is going to cost them. They have the right to return the money they borrowed by the end of the day if they want they changed their minds. They have the right to know concerning dispute resolution. The funny thing is they have the right to know so much, that the majority of payday loan places will hand you a couple pages of fine print on your rights and have you sign something at the bottom stating you surrender your right to a jury trial and you do so willfully. In spite of the volumes of details payday loan places provide, people notice themselves going to payday loan places and signing on the dotted lines anyway. It makes one wonder whether knowing is sufficient. How can one know and yet take decision of something which has been compared to usury? Is it lack of knowledge, lack of concern, or something else altogether that keeps the industry in customers at such a rate that the business seems to be thriving while other businesses are floundering?

To say the matter raises questions is an understatement. It’s tough to have sympathy for an industry which seems to have thrived while the country is experiencing one of the toughest monetary crisis in current memory. The payday loan industry has certainly profited, having become in fact, “$28 billion industry nationally, according to the Center for Responsible Lending” (Associated Press, 2007). As the industry grows, it leaves us wondering how individuals would willingly pay 480 percent. Ray Fisman, in The Dismal Science, puts the question “Do human take out payday loans because they’re desperate, or as they don’t understand the terms?” What Fisman almost asks but doesn’t is are people stupid or don’t they understand that one $500 loan from these establishments probably costs them $2692 a year? These seem to be the same people who then blog questions like, “Is my payday loan place going to have me in prison? Are these businesses preying then on the stupid?

Yet, nobody is forcing them to go. Or are they? It has been suggested that our current economic crisis has made it nearly impractical for the average person to obtain a loan in any other way. In response to the push for more stringent borrowing practicing, traditional banks are turning away traditional borrowers. Maybe it is not a coincidental connection between the push by banks to be stricter and the responsiveness of the fringe industry to develop as a conclusion. payday loan lenders aren’t stupid. Like every belligerent kid, they know there is a limit to how far you can push until you get, proverbially, smacked in the head.

President Obama has made a point of declaring that America, to be economically strong, should be capable to have credit. If this is the case, we are looking at a new wave of Americans who have been forced out of the credit game, disenfranchiseed by a banking industry which was careless enough to loan to irresponsible consumers forcing mainstream America to pick an even stupider path.