• Big Government and Payday Loans

  Filed under Economy, Finances, Payday Loans, Politics
  Mar 12

  It’s that time of year again, legislative session. States are all weighing in on what laws to make regarding their people. Yet again, payday loans are a hot topic. Lobbyists and consumer advocates are hitting legislators harder than ever to ban payday loans. Do payday loans merit such treatment?

  The answer is no. You’ll find if you dig deep that the lobbyists and consumer advocacy groups trying to ban them are all funded by banks and credit unions. You see, they are in the payday loan business too. The only difference is, what they charge you is considered fees, what a payday lender charges you is considered interest.

  Why does that matter? Which sounds worse, you owe me $20 or 400% APR? What if I told you that 400% APR was on a $100 loan for a week. Which one sounds worse and which one is worse? Exactly…

  Banks know there is big business in short term loans. They want it all for themselves. They’ll spread every lie imaginable to get payday lenders out of business so they can be free to charge what they want how they want.

  The central argument is around the APR. Ask yourself, do you measure your shoe size in kilometers? No? Why not? Because the size of a shoe is better scaled to centimeters maybe?

  So why measure a ten day loan in ANNUAL percentage rate? Why not look at the daily percentage rate? At 400% APR, a payday loan would cost you just over 1% per day. After 10 days, you pay somewhere around 11% in interest. It’s all about context.

  Now, if you don’t pay back a payday loan quickly, the interest can increase quickly. That’s why you borrow responsibly. Don’t borrow more than you can pay back. Don’t take out multiple loans at the same time. Be smart about what you’re doing.

  As always, lawmakers feel it is the government’s job to dictate to us what is good for us and what isn’t. Oh please…

  I’ve got kitchen knives that could do great harm if not used properly, should we ban them? I could squirt a lemon in my eye and hurt myself, should lemons be outlawed? I can lose my life savings in Vegas, should the city be shut down?

  Likewise, you can borrow like an idiot and take way too much money and do it from multiple lenders. Or you can borrow responsibly and only get what you can pay back by next payday. It’s on ourselves to be educated and informed about the decisions we make.

  But government gets bigger and bigger and runs more and more aspects of our lives. We stand idly by and watch as more people get put out of business and more freedoms are taken away from us. When will enough be enough?

  Tagged as: Payday Loans, Politics
  
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