Payday Loans - The Right Tool?

I am always intrigued by plumbers. I admit I’m not a handyman myself but I always felt that I was familiar enough with tools that I could take a look at one and immediately assess its value and usefulness. But whenever I have a crisis at home where I need to call a plumber, he invariably pops up with an all-new weird-looking tool that I never saw before. Sometimes I ask him the name of the tool but I cannot remember his answer because all I am considering is the place something so awkward could serve a helpful purpose. And more often than not, I am amazed when I note that the plumber knows just how to put the tool to utilize to ensure that my dreaded emergency gets solved!

Payday Lending

I seriously considered plumbers recently while I was reading a piece of writing in regards to the payday lending industry. There’s been a good debate occurring about payday cash advances and whether or not they are fantastic or evil. There are great arguments on both sides and looking at many of the advantages and disadvantages, it struck me that almost all the arguments I saw on both sides were valid. I did not disagree with one of the arguments themselves, simply with the conclusions. I began to realize that payday lending is neither good nor evil; it is merely an awkward-looking tool. If used the right way, it might solve the correct emergency. If not, then it might be very useless.

Payday Loans Are Intended As Temporary Credit Loans

If used as intended, they are often the best way to fix a temporary financial hardship. However, they can even be easily abused. For one thing, it is important to pay them down promptly. Rolling them over more than once can turn a great tool into a bad one quickly. Also, when contemplating a quick payday loan, it is of utmost importance how the borrower deals with an ethical and trusted lender. Payday loans would be best when you need between $100-$1500 in a short time, you can repay in a short time (2 weeks or less) and the loan can help you avoid bank card fees, bank overdrafts and taking your possessions to some pawn shop.

Payday lending exists since it supplies the sort of tool that can’t be found elsewhere. In these days of foreclosures, bad economic times and disappearing credit, there is sometimes a requirement for a really quick emergency borrowing option that doesn’t entail ab muscles high fees charged by banks and credit cards.

However, Many Think Payday Lending Should Be Restricted

Professor Todd J. Zywicki of George Mason University, in a very 2009 paper entitled “The Case against New Restrictions on Payday Lending”, spoke out against placing restrictions on payday lending, arguing that “misguided paternalistic regulation that deprives consumers of access to payday advances would probably force many of them to make to even more expensive lenders or to do without emergency funds”. And along the same lines, Dr. J. R. Clark, University of Tennessee Chattanooga, writing in the September 2, 2019  issue of Exchange Magazine, suggests that “there’s significant academic and market evidence that high-interest lending such as payday cash advances, despite their considerable – some would say astronomical – expense, enhances the welfare of borrowers. Predatory loans, alternatively, are loans obtained from the lender through deception or fraud, nor enhance the welfare of borrowers. It is a disservice towards the public to confuse loans which can be truly predatory with those who are merely expensive.”

What form of consumer helps to make the most utilization of payday loans? Contrary to a common perception that payday lenders target the poor, recent findings seem to indicate that payday cash advances are attracting more “middle class” customers. Marketing research data published by Comscore in its July 2019 issue of ComScore Marketer demonstrated that “the largest number of (individuals seeking short-term credit online) earn between $50k-$74k.”

Then the next time I think about payday lending, I am going to put the subject in their proper perspective by remembering my plumber and his awesome tools. The tools usually do not exist so that I can love them or hate them. They exist to ensure that an incredibly specific problem can be solved. For that purpose they’re wonderful. For any other purpose, they may be useless. A payday loan is an awkward-looking tool that I can call upon when and if I need it. And just like the plumber, I am usually the one responsible for all; if I know how to utilize it wisely, then I can make it work to my advantage.