Reply #41: how much of the payday loan business is built on repeat customers?

[hfojvt]

You make is sound like somebody only gets one of those loans once every five years or something, but that's ridiculous. Many of the people I know who run behind on their money are always running behind. They get paid on Friday and have no money left by Monday, and they do that every payday.

People who get monthly checks are the worst, especially if they are on mental disability. Here we are asking somebody to plan their expenses for a whole month on a fairly small check. Not only that, but the person we are asking to do that has a mental disability. They run out of money by the 15th. Same with poor people living on social security.

You know what really contributes to their problems? Payday loans.

Here's how it works. Get a check for $600 on the 1st of the month (or the 3rd). Run out of money by the 21st. Get a payday loan on the 25th for $200 (less a $30 fee). On the next 3rd you get another check for $600. Only this time the check is only $400 because $200 of it just went to pay off the payday loan. Guess what. If you couldn't make it through the month on $600, you ain't gonna make it on $400 either. Not to worry though, because you can get another payday loan and pay another $30 fee. Ultimately that person is living on their small income minus $360 a year in payday loan fees. It's a hole they will have a very hard time getting out of.

But no worries. It's not like they are REALLY paying 390% interest? Just 180% interest on $200 borrowed 12 times.

Do you know why I know this is a likely scenario? Because I used to have friends in this exact same situation. They borrowed money from me every month (and paid it back when they got their checks, only to borrow again two weeks later when they ran out of money again). Which is how people would get by if there were no payday loan places - with a little help from their friends. The highly profitable payday loan industry - they are not one of them. They are no friend to the poor.