I don’t understand why the anti-payday lending groups can’t wrap their heads around this one.
Payday lenders are extremely clear about what taking out a loan will cost. They have to be, in many states what they tell borrowers is regulated and must be extremely clear. For CFSA member companies, according to CFSA’s Best Practices lenders need to show borrowers in writing and on big posters in their stores exactly what the terms are. Matter of fact, studies CFSA has conducted tells us that consumers choose payday loans because it is very clear.
To recap:
Lenders are up front about the terms of the loan.
Borrowers understand what the loan will cost them.
Borrowers still choose to take out the loan.
Anti-payday lending groups are confused, demand that payday loans be banned because borrowers don’t understand the terms of the loan.
Borrowers know the terms and still take out payday loans.
This is true, though a CFSA sponsored study by Georgetown University showed that most customers can’t recall the APR of their last transaction. But that’s because they don’t care. Long before payday lending came on the scene we have known that rationed borrowers are insensitive to the APR of their debts.
If so, payday pundits should more enthusiastically embrace the APR because it is no threat to your business. You disclose the APR, hence you are doing your part to help consumers comparison shop.
Aurther,
They do know the terms, its $15 for every $100 borrowed. They know and understand what they have to pay back . At least at the company where i work , we point out the APR twice and tell them what it is one more time. Its not hidden.
Saying that they dont understand the terms because they dont know the APR is like saying that I dont understand a big mack is fattening because I dont know how many grams of fat.