Media watchdog debunks Center for Responsible Lending’s claims about payday loan customers
July 19, 2008 | Center for Responsible Lending, industry, industry critics, media coverage, research | Comments (2)
STATS, an independent, non-partisan organization affiliated with George Mason University looks at the numbers behind the news. They just issued a report about media coverage of the payday lending industry:
This analysis raises questions about the popular image of payday loans as a usurious burden on hard working Americans beset by hard times. Regulators and policy makers should certainly be concerned about households that are barely scraping by and the financial predators who take advantage of their plight. And there is a natural tendency for journalists to take up this cause, in the honorable tradition of a watchdog press that “comforts the afflicted and afflicts the comfortable.” But sympathy needs to be based on solid information, and hype is no substitute for homework.
The report is worth a read. It debunks two key myths about payday lending and exposes the misuse of numbers by the Center for Responsible Lending, the industry’s biggest critic.
Comments»
This is an excellent article and points out many of the facts that payday lenders have been stating for years. If only the rest of the press and politicians would pay attention and do their homework before painting the picture that payday lenders are bad businesses when they are not!
Sounds like another pen for hire, like Marc Kilmer at the Buckeye Institute. Guess a career at Comcast doesn’t prepare you to be objective when your “nonpartisan nonprofit” is getting contributions from the industry.
“The notion that $793 is paid back for every $325 loaned is even more deceptive. It suggests that an individual takes out a single loan of $325 and pays it off along with an additional $468 interest. This is precisely the type of “rolling over” that is widely limited or prohibited by law.”
What everyone seems to forget is that most borrowers go to another payday lender to pay off the first one and just 24 hours later, the customer can go right back to the same store they just paid off and take out another one. Pretty darn close to a rollover. The point is, most borrowers end up paying a lot of money, often hundreds of dollars to borrow their own $300 to $500!