Progress Illinois

The idea that a 400% APR on a two-week loan is outrageous is nothing less than an outrageous distortion of reality. It incorrectly implies that payday lenders are charging ten or more times what they could be charging whereas in fact about 90% of payday-loan fees go towards the lender's costs of issuing the loans. In fact payday loan companies have a lower profit rate than banks and many other kinds of businesses. Even the so-called payday loan alternative offered by nonprofit Goodwill Industries carries a 252% APR. See http://paydaypundit.org/2008/06/22/the-252-payday-lending-alternative-op...

Payday lenders lend money to people whom nobody else will lend to. Payday loans save lives in emergencies and more generally save people money from the higher costs they would otherwise incur from bank overdraft charges, credit card late-payment and overlimit fees, late rent-payment and utility reconnection fees and other such charges. Third-party customer satisfaction surveys clearly show that an overwhelming majority of people who have used payday loans consider them to be a useful financial service. See http://www.cfsa.net/get_the_facts.html

Yes, some people borrow irresponsibly and get themselves into a bind with payday loans, but every good thing is misused by some people who need to learn to be more responsible. Consumer protection in the field of loans should entail making sure that loan offerings are advertised and presented clearly with no hidden charges and, of course, that debt collection laws be strictly adhered to. Beyond that merchants and service providers should have a right to set their own prices in accordance with market conditions, and consumers should be allowed to decide for themselves if an honestly advertised product or service works for them. If the government can tell a lender how much she can charge, then it can tell every doctor, lawyer, and free-lance secretary how much she can charge as well. That isn't consumer protection but authoritarianism. This of course only refers to merchants and service providers who haven't been granted a license to make use of limited public resources in the operation of their business.

You people should listen to George McGovern, who is about the most progressive Democrat this country has known. See his Wall Street Journal oped piece, "Freedom Means Responsibility," at http://online.wsj.com/article/SB120485275086518279.html

It seems to me that the critics of payday lending are for the most part rebels without a cause.

Jon Schultz, you're wrong about GoodMoney. It makes perfect sense to talk about the APRs of standard payday lenders. But with GoodMoney, after you've rolled over the loan four times, you can convert the loan into a zero-interest loan, merely by attending a financial education class. So as the lifetime of the loan grows, the effective APR dwindles.

Not so with the standard payday lenders. If their APR is 400%, or 1000%, or 3000%, that is the rate you're paying from the day you take out the loan to the day you pay it off.

You claim that 90% of a payday lender's fees go to covering business expenses. If so, how is it that a program like GoodMoney can charge a third lower fees, pass up the opportunity to gouge delinquent lendees (the primary source of revenue for most payday lenders), and still manage to fully fund their service?

The industry funded research used to prove that, hey, people *like* their payday loans is chock full of holes. Twice as many of the surveyed lendees lied and said they'd never taken out any loan as actually completed the interview.

The "personal responsibility" mantra is a self-justifying crock. Personal responsibility cannot exist without a clear understanding of the choices available and the consequences of those choices. There are all sorts of goods and services that society deems too hazardous to allow into the market, even though there may be the possibility of using them responsibly. Without severe constraints on the penalties for late repayment (honestly, 400% interest?), payday lending should probably be among them.

If this business model isn't profitable, why are there more PDL stores in AZ than Starbucks and McDonalds combined?

With just less than one week until the election, controversies surrounding both the Democrat and Republican camps continue to emerge. The most recent media storm has focused on the $150,000 that the Republican National Committee spent on new clothes for Vice Presidential Candidate Sarah Palin. Even though the story has generated a mountain of negative publicity and anti-Republican attacks, I refuse to let it sway my opinion. One has to consider that both Palin and Democratic Presidential hopeful Barack Obama have spent thousands on clothing, and it shouldn’t change the direction in which the vote is cast. I mean, we live in a society based on image and possessions; if a candidate didn’t spend money on her wardrobe I can only imagine the criticism she would receive then. If one candidate donned designer outfits and the other dressed in frumpy clothes, Americans would have much less respect for the latter candidate. Plus, look at the amount of attention Sarah Palin is receiving from her wardrobe! It doesn't seem like such a bad political move because in the end, publicity is publicity. When it comes down to it, Americans should base their votes on the qualifications of the candidates, not the clothes they choose to wear. We should vote for the candidate that will protect our personal financial freedoms and the continued rights to no fax payday loans.
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I've seen that Lenny The Loan Shark Commercial before, it was on this payday blog. The perspective on it is pretty funny.