I have to admit that I have a great deal of sympathy for companies like National Payday who provide payday loans and cash advance services. I know they’re demonised by various people for the prices they charge: when scaled up to annual numbers the interest rates can indeed look horrendous.
However, there’s two things that the critics always seem to me to overlook. The first is that there are also certain costs associated with lending small sums for a short time period: if someone’s borrowing $100 or $200 for a few days then even if you’re only going to charge $10 for processing the application that can be calculated up to a very high annual rate.
The second is that, well, if they’re not going to borrow money this way, they’ll just do it elsewhere, at even greater rates (assuming that such loans are made illegal, as they already have been for US military). Pushing people out of an expensive but legal (and thus controlled) service into the hands of the loan sharks just doesn’t seem all that sensible to me.
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