Payday loans borrowers have civil rights. They have the right to know how much their loan is going to cost them. They have the right to return the amount 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 funny thing is they have the right to know so much, that most payday loan stores will hand you a couple pages of fine print on your rights and have you sign something at the bottom saying you waive your right to a jury trial and you do so willfully. Regardless of the volumes of information payday loan places give, human 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 could one know and yet take decision of something that has been compared to usury? Is it lack of knowledge, lack of interest, or something else altogether which keeps the industry in customers at such a rate that the business seems to be thriving while other businesses are struggling?
To say the matter raises questions is an understatement. It’s tough to have sympathy for an industry that seems to have flourished while the country is experiencing one of the toughest monetary crisis in current memory. The payday loan industry has certainly 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 pay 480 percent. Ray Fisman, in The Dismal Science, puts the question “Do individuals take out payday loans as they’re worried, or since they don’t understand the rules?” What Fisman almost asks but doesn’t is are people stupid or don’t they understand that one $500 loan from these establishments potentially costs them $2692 a year? These seem to be the same human who then blog questions like, “Is my payday loan place going to have me in prison? Are these businesses preying then on the stupid?
So far, no one is forcing them to go. Or are they? It has been advised that our present economic crisis has made it nearly impossible for the average person 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. Maybe it is not a coincidental link between the push by banks to be stricter and the responsiveness of the fringe industry to develop as a result. payday loan lenders aren’t stupid. Like every belligerent child, they know 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 declaring that America, to be financially strong, needs to be capable 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 which was irresponsible enough to loan to foolish customers forcing mainstream America to select an even stupider path.