Payday Loans: Why So Much Hate?
This post is pretty different than most other articles and posts related to business and finance, because I’m going to get a little personal. On a personal level, I can’t stand what big finance and lobbyists are doing to the short term loan industry, and this is my response to them.
When I talk about short-term loans, I’m talking about the cash advances that you see advertised on billboards and TV. The loans where you get an advance on your next payday. That’s what I mean when I say “short term loan.”
Of course, these are the loans that the media and pop culture love to make fun of and take on and attack. I think they’re wrong, even though it’s politically incorrect for me to say so. I think it’s wrong to attack these loans mostly because they’re often perfect for some people in some situations.
Before We Start
Of course now, I want to make sure we’re on the same page before we launch into a full fledged discussion. I am almost positive that the big financial institutions and corporations are behind the attacks on the short term loans and payday loans. These small loans are by small financial companies — usually locals. It should be obvious why international financiers are taking these loans on.
Short-Term Loans Vs. Credit Cards
One of the biggest risks to consumers isn’t a short term loan. You can’t lose more than a few hundred bucks with a short term loan. A credit card can cost you tens of thousands of dollars. That’s why credit cards are even more scammy and are worse.
Don’t Lose Your Lights
In some situations, losing a little money is worth it in order to keep the lights and electricity and air conditioner on. If a lady is with child it is worth it to spend a little extra money to keep the power going — this should be obvious.
Short-Term Loans are Like Hotels
One of the most common arguments against short term loans is that payday loans cost several thousands in percentage points per year. That doesn’t make sense, because hotels would be the same way. Sure, they’re expensive over the long term… that’s why they’re called short term loans.
Final Points and Concluding Thoughts
Payday loans are one of the best ways to keep the lights on, and are better than credit cards, and are often justified. They shouldn’t be banned and big finance is wrong.
So in conclusion: just objectively analyze your situation before deciding to accept or reject a short term loan.
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