Quote:I used payday loans for a while when I was rebuilding my credit. The interest rate is over a year period if you take that loan out every paycheck for a year that's what you'll pay otherwise it's a fixed fee. When I borrowed 200 it was a $25 fee due in two weeks (the next paycheck) + a $5 state fee so $200 cost me $230 in two weeks.

 

Honestly the payday loans where very reasonable compared to going late on rent or having the water shut off ect..... Now if you defaulted that's a different story.

The issue is that your average pay day loan customer is going to have to take out another pay day loan to pay off their first loan.  Because they're truly desperate in the first place.  Unless they're going to be coming into a new source of income soon, they're going to not be able to pay back the money they owed because they're still paying for the things they borrowed for in the first place.  And they set it up so it's easy to get pretty far into debt.

 

My wife and I were pretty desperate at one point.  After we had our first set of kids.  She lost her job, and we had all kinds of bills.  We were fortunate enough not to have to take out a pay day loan because we had a friend who loaned us the money we needed (and let us pay it back when we could).  It took us a while to be able to pay her back because we were in a truly desperate situation.  Had we taken out a pay day loan, we'd have probably had to take out another one, and then another one, and another one until my wife finally was able to finish college.    It's not like we hadn't saved or prepared.  It was that unexpected things came up, and came up at the worst possible time.  Some people end up in an endless cycle of pay day loans because of that.  


They have their places, but they should be subject to regulations that prevent predatory lending.  

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