Payday loans borrowers have rights. They have the right to know how much their loan is going to cost them. They have the right to return the money they borrowed by the end of the day if they want they changed their minds. They have the right to know concerning dispute resolution. The witty thing is they have the right to know so much, that the majority of payday loan places will give you a couple pages of fine print on your rights and have you sign something at the bottom stating you surrender your right to a jury trial and you do so willfully. In spite of the volumes of details payday loan stores provide, people find themselves going to payday loan stores and signing on the dotted lines in any case. It makes one wonder whether knowing is enough. How may one know and yet decide on something which has been compared to usury? Is it unawareness, indifference, or something else altogether which keeps the industry in patrons at such a rate that the business seems to be flourishing while other businesses are struggling?
To say the problem raises questions is an underestimation. It’s tough to have sympathy for an industry that seems to have flourished while the country is going through one of the toughest monetary crisis in current memory. The payday loan industry has positively profited, having become in fact, “$28 billion industry nationally, according to the Center for Responsible Lending” (Associated Press, 2007). As the industry develops, it leaves us wondering how people would readily reimburse 480 percent. Ray Fisman, in The Dismal Science, puts the question “Do people take out payday loans since they’re desperate, or since they don’t know the terms?” What Fisman almost asks but doesn’t is are human stupid or don’t they know that one $500 loan from these establishments probably costs them $2692 a year? These seem to be the same individuals who then blog questions like, “Is my payday loan place going to have me arrested? Are these businesses preying then on the stupid?
Yet, no one is forcing them to go. Or are they? It has been advised that our current financial crisis has made it nearly impractical for the average individual to get a loan in any other way. In response to the push for more stringent borrowing practicing, traditional banks are turning away traditional borrowers. Possibly it is not a coincidental connection between the push by banks to be stricter and the responsiveness of the fringe industry to develop as a conclusion. payday loan lenders aren’t stupid. Like every belligerent child, they understand there is a limit to how far you may push until you get, proverbially, smacked in the head.
President Obama has made a point of saying that America, to be financially strong, must be able to have credit. If this is the case, we are looking at a new wave of Americans who have been forced out of the credit game, disenfranchiseed by a banking industry that was irresponsible enough to loan to irresponsible customers forcing mainstream America to select an even stupider path.
