Comments on: Payday Loans are Not Evil

By: Penny Saved

Penny Saved — Tue, 30 Dec 2008 18:26:02 +0000

Just because they are advertised well, doesn’t mean you should take out a loan. I ignore advertisements of all sorts, including payday loans.

Financially speaking, they’re terrible. Doesn’t mean they are evil. You should, however, explore ALL other means to get the funding you need, before even *considering* a payday loan.

By: La la

La la — Wed, 17 Dec 2008 16:17:12 +0000

They are predatory.

In the UK they are largely unregulated. They charge more that 1000% and use aggressive telesales methods to encourage people to rollover their loans or take out higher amounts. They even offer discounts for referring your friends! As soon as I am free of these loan sharks I am never taking out one of these loans again.
http://paydayloantrap.synthasite.com/

By: Penny Saved

Penny Saved — Tue, 23 Sep 2008 16:35:18 +0000

If GoodMoney is able to survive financially on low or “normal” interest rates, why don’t they do so from day one?

By: bryce

bryce — Tue, 16 Sep 2008 10:38:12 +0000

Actually, I imagine that the situation is even worse than I’m describing. Consider that many people are chronic users of payday loans. The article says that about half of GoodMoney’s $9.50 per $100 goes to paying off bad loans. How much of that defaulting is happening because their customers are too strapped trying to make payments to other, more predatory lenders? It must be significant.

Also, note the fact that GoodMoney helps people convert their payday loans into low-interest loans from a partnering credit union. The fact that this is possible *at all* is a strong indicator that a great many of these loans don’t require such high interest rates in order to be profitable.

To say that payday lenders are simply filling a market niche is therefore a lie. In most cases, these lenders are not providing a useful service so much as taking advantage of their customers’ lack of financial education.

By: bryce

bryce — Tue, 16 Sep 2008 10:26:48 +0000

GoodMoney doesn’t charge 252% APR interest.

I mean, they do over the short term, but they don’t over the long term.

That is to say, once the loan is rolled over four times, lendees have the option of attending a finance workshop, after which their loan becomes interest free. It says so right in the article. If I took out a $100 loan with GoodMoney, and couldn’t pay it off for an entire year, the effective APR would be less than 50%. If I couldn’t pay it off for 5 years, the APR would be about 10%.

In short, trying to analyze GoodMoney’s service by referring to the APR is misleading. Trying to analyze other payday lenders by their APR is not, because that’s the actual interest you’re paying over the life of the loan, from the day you take it out to the day you pay it off. So citing GoodMoney’s APR as “proof” that payday lenders “need” to charge such outrageous fees is infuriating, and perhaps even dishonest.

By: Risk vs Reward

Risk vs Reward — Tue, 13 May 2008 03:21:38 +0000

[...] surely heard the terms. Risk and reward. Whether you’re talking about payday loans, stocks, 401(k)’s, or starting a business, both risk and reward are front and [...]

By: Penny Saved

Penny Saved — Tue, 15 Apr 2008 02:27:37 +0000

Sorry Cheryl, I really do feel this way about payday loans. They’re not a *good* choice, but certainly not inherently evil. One should only proceed with a payday loan if all other options are exhausted, and one knows the risks and costs.

By: cheryl

cheryl — Fri, 11 Apr 2008 17:49:43 +0000

Payday loans are stupid, period! I think you’re just playing devil’s advocate for the sake of collecting comments.

By: Penny Saved

Penny Saved — Wed, 12 Mar 2008 01:00:55 +0000

Payday loans companies are not in business to help people with their finances… they are in business to loan money.

By the same reasoning, fast food chains should not sell burgers and fries to overweight people. Of course that’s ridiculous – could you imagine the uproar it would cause if someone were refused a meal because of their size?

By: Prince of Thrift

Prince of Thrift — Sun, 09 Mar 2008 03:48:49 +0000

That’s true, but other credit issuers try to, in some part, weed out the irresponsible ones. Payday loan places on the other hand take advantage of these people and make their situation worse by not offering them any real help. If you believed their commercials, then everything would be fine, but instead their real customers and targets are people that have no business getting a loan in the first place at any interest rate.