The cash advance loan industry is
giddy over a recent customer survey that shows that a lot of of their customers
could gladly take out the expensive loans again. As a matter of fact, most
customers polled in the survey said they were pleased with their loan. This
might shock individuals who regard these loans, with interest rates that can
exceed four hundred percent a year, as predatory lending. On the other hand,
the payday loan business conducted the survey on their own, so perhaps the results
are not so astonishing after all.
The payday loan lending industry is
in the business of providing temporary loans to people who need a few hundred
dollars to pay their bills until they receive their next paycheck. The borrower
will get the loan for fourteen days and provides the loan company a postdated
check for the amount of the loan plus interest. In fourteen days, the borrower
will pay back the loan in cash, or instead, the loan company will deposit the
borrower's check. Although the common loan varies from $100-$1500, the interest
rates tack on anywhere from $10 to $20 for each $100 borrowed. When thought of
as an annual rate of interest, the interest paid on a two week loan can add up
to 400% or more each year.
Individuals who are opposed to quick
cash loan shops, and there are many of them, claim that the lenders take
advantage of poor people who have few options for loans and represent the
segment of society that is least capable of paying these kinds of fees for
loans.
The quick cash loan industry
disagrees. The Community Financial Services Association of America, a cash
advance loan industry trade organization, offers differing information on its
Internet site:
The group says that their common
client is not indigent, but literally earns $25,000-$50,000 annually, that more
than 40% own their own houses and that a majority of their clients possess some
college schooling. They continue to state that this shows that their common
customer isn't a part of the working poor but is really a part of the middle
class.
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