Get a Payday Loan in UK

Wall Street Journal: Inaccurate When It Comes to Payday Loans

Sometime last week, the Wall Street Journal published an article on payday loans in the United States.  Though we may be in a different country from them, the interest surrounding payday loans remains the same.  So let’s take a look at what’s going on over there and we may even find something that we can use.  Anyway, the WSJ published “SOCIAL INSECURITY: High-Interest Lenders Tap Elderly, Disabled.”  Here is an excerpt of that article:

One recent morning, dozens of elderly and disabled people, some propped on walkers and canes, gathered at Small Loans Inc. Many had borrowed money from Small Loans and turned over their Social Security benefits to pay back the high-interest lender. Now they were waiting for their “allowance” — their monthly check, minus Small Loans’ cut.

The crowd represents the newest twist for a fast-growing industry — lenders that make high-interest loans, often called “payday” loans, that are secured by upcoming paychecks. Such lenders are increasingly targeting recipients of Social Security and other government benefits, including disability and veteran’s benefits. “These people always get paid, rain or shine,” says William Harrod, a former manager of payday loan stores in suburban Virginia and Washington, D.C. Government beneficiaries “will always have money, every 30 days.”

The law bars the government from sending a recipient’s benefits directly to lenders. But many of these lenders are forging relationships with banks and arranging for prospective borrowers to have their benefits checks deposited directly into bank accounts. The banks immediately transfer government funds to the lenders. The lender then subtracts debt repayments, plus fees and interest, before giving the recipients a dime.

As a result, these lenders, which pitch loans with effective annual interest as high as 400% or more, can gain almost total control over Social Security recipients’ finances.

After reading this article, one would think that payday loan lenders are the bane of the society!  However, I ran across another article which points out inaccuracies in the former article.  It states:

The Community Financial Services Association (CFSA), the national payday loan trade association, is looking to correct inaccuracies in the February 12th front-page Wall Street Journal story by Ellen E. Schultz and Theo Francis, Social Insecurity: High-Interest Lenders Tap Elderly & Disabled. CFSA claims the authors confused payday lenders with other types of small loan services: primarily installment and catalog lenders.

CFSA claims the article describes loan practices that are NOT conducted by payday lenders.  Errors in the WSJ article as cited by CFSA

Example 1:
The article says payday lenders are “…forging relationships with banks and arranging for prospective borrowers to have their benefits checks deposited directly into bank accounts.” This is patently false. State laws only authorize payday lenders to hold a personal check, deposited on the borrower’s payday.

Example 2:
The story says: “One-fifth of those without conventional bank accounts are receiving government benefit checks through nonbanks, including payday lenders.” This, too, is blatantly false. Payday lenders do not receive checks on behalf of recipients (state law prohibits this practice) and 100 percent of payday lending customers have a checking account at a bank or credit union.

Example 3:
The two key anecdotes detailed in the article involve companies that are not payday lenders: Miracle Loans and Money Tree of Georgia

Example 4:
The article says that the payday lending industry is “clustered” around government-subsidized housing in Washington, D.C. “There are at least four payday lenders within a mile-and-a-half of Fort Lincoln,” the piece says. Washington, D.C., is an urban environment. A mile-and-a-half away from a location in an urban environment does not constitute “clustering” by any known standard.

So which one to believe?  I think that your personal experience should dictate your stand.  Personally, I still think that payday loans are useful and should be used properly.