Are Payday Lenders who we really think they are?

Jun 20, 2017 by

Are Payday Lenders who we really think they are?

Though we have more information readily available to us now that the Internet is so readily available, people still base their opinions upon what they hear people say. And it is often the loudest voices (websites with the most visitors) that tend to get listened to the most. This is not a good thing, as the world has grown more and more polarized despite most of us having instant access to all the facts that are available to us. People would often rather just go along with the popular opinion than make informed decisions for themselves.

This state of affairs leads us to a world where perception really has become reality for most. If the websites and people we tend to gravitate toward say something on a topic, many people simply mentally check out and take that opinion on as their own. A topic that really shows this idea in action is payday loans. The mainstream media has pretty much demonized the lenders that make up this industry, while making the people who use these loans out to be folks who simply don’t know how to make better choices for themselves. Heck, if you believed what gets put into print most of the time, you’d think that every payday lender was a millionaire Ebenezer Scrooge type of character; someone who is raking in tons of profits off of the misery of others.

So, what kind of money are payday lenders raking in regularly? Are they really the heartless, rich money changers that so many people would like you to believe? In a word – “No!” It turns out that many payday lenders are not nearly as wealthy as the CFPB and other organizations would like you to believe. Studies have been done across the industry to find out what the average lender brings in every year. The higher per-loan and store overhead costs can make it extremely difficult for lending companies, especially smaller companies to remain profitable.

It is important to remember that payday lenders are in the business of providing unsecured (no collateral) loans to some of the highest risk borrowers (people with low credit scores and/or lower than normal income levels.) These folks make up a large portion of the country, but are dramatically unserved/underserved by the mainstream banks and other creditors. In other words, in many ways payday lenders have a corner on a market. Yet, most lenders continue to charge fees that are very similar across the board. That is to say, that payday lenders (for the most part) are not driving up the costs associated with their loans, even though that would be pretty easy for them to do, as the majority of their client-base has no other source to turn to for small dollar/short term lines of credit.

The long and short of this whole situation is that payday lending companies (especially the smaller to medium sized ones) are like other small businesses in this country. Most of them care about the people and communities they serve. Most of them are not on a mission to gouge their clients, even though they could easily do so. The majority of payday lenders are working hard to remain even minimally profitable, and like the fact that they are able to provide valuable services to the communities that they work in.

Think about that the next time you read an article that talks about wealthy, predatory lenders who have no regard for the people they loan money to. This description might work as great click-bait and undoubtedly outrages people. But it simply does not paint an accurate picture of 99 percent of all payday lending companies doing business today.

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