Tuesday, December 29, 2009

Payday Loan Businesses

If he has exacted usury Or taken increase -- Shall he then live? He shall not live! If he has done any of these abominations, He shall surely die; His blood shall be upon him. (Ezekiel 18:13)

There are more Payday Loan Stores in Illinois than any other state in America. And there are more of these stores in America than there are McDonalds. They are often located in low-income areas, and low-income individuals who have bad credit, are high-risk lenders, and are desperate for cash are their main customers.

That said, what are Payday Loan Stores?

Think about it this way: Most Americans (61%) live from paycheck to paycheck, or have some sort of fixed income (like the elderly living on social security). While this income may be sufficient to cover basic needs and pay the bills, unexpected circumstances (like requiring emergency medical attention, or needing to fix a car) may stretch that pay check thin, so that paying that month's utility bill may be just out of reach (even though your next paycheck may only be a week or two away, you don't want to be late on your bill).

Not a problem! You can just go get a payday loan, where you can get cash immediately to pay that utility bill, and then pay off the loan once your next paycheck arrives in the mail. Then you're done. It's that simple*.

*Well, it might not be that simple, actually. In all likelihood, your interest rate is going to screw you over be in the triple digits. A national survey showed that "at most places the interest rates varied from 390% to 851% annually with the average being 474%." Compare payday loan interest to what the average person pays for their credit card: 15-30%.

But don't worry. If you're unable to pay off your monthly payment on your payday loan (three out of four borrowers can't afford to repay their loans at the end of the two-week period), you can take out another payday loan to temporarily hold you over... repeat ad infinitum. The goal of the payday loan industry is to help Americans pay their bills on time! keep people paying ridiculous amounts of money for as long as possible.

Unfortunately, because interest is so high, it can take years to pay off a loan of a mere 250$ . A year later or two, a person may have ended up paying a couple thousand dollars, without much hope of an end in sight because they keep needing to take out loans. This is often how payday loans work out. For low income individuals, those already in debt, and for those with fixed incomes, payday loans can be devastating. Far too often, people end up going bankrupt, becoming homeless, etc, because they were desperate for quick money or were misled by these businesses.

Check out how many locations there are in the Chicago area alone: [link]

How is it that these things are even legal..? I wonder why there are so many of them in America-- but what do you think it says about America that there are so many of them? Do these businesses have the responsibility to not give instant loans, or are they merely filling in a demand?


  1. Nice job, Michelle. This is a fascinating post. You're quite right these Payday Places -- Currency Exchanges, in the city -- are predatory. You might be interested in reading Barbara Ehrenreich's Nickel and Dimed -- a fascinating book on the horror of working full time for minimum wage and living from check to check.

    You have done a better job of diversifying topics and you are writing more focused posts than last q. -- though there are still some gains to be made here!

  2. Do you need a loan here is an opportunity for those in financial problem and those who want financial uplift in their life, we give out
    loan at a very reasonable interest rate, we give out all kind of loan debt loan, business loan, medical loan, home loan, student loan etc to help the nation from financial stress.

    Contact us today via E-mail for financial help: robertsmoakloanfunds@gmail.com

    Best Regards