Comment of the Day II
November 6, 2008 | Uncategorized | Comments (0)Wake up, little Susie {an anti-payday lending site pest}. The customers didn’t reject the product, the product was rejected by people who don’t use it but who were fooled by an invalid argument put forth by opportunistic politicians and activists who bet they could get people riled up about “outrageous” interest rates and won. But the fact is that a 391% APR is NOT outrageous for a small-dollar short-term loan, which is the only type of loan most payday-loan customer qualify for. About 90% of that 391% interest goes to cover the cost of making the loan and to compensate for loans other customers default on, and that is why authoritarian APR caps simply take away the best option many people have and replace it with absolutely nothing.
Even Goodwill Industries and Prospera Credit Union, which offer a nonprofit payday loan, charge about $10 per hundred borrowed which is about a 260% APR. Their website is GoodMoneyStore.com.
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