This article, “Bill Would Limit Payday Lending”, which is written by Peter Hull, describes payday loans and exhibits contrary opinions between two people. First of all, author shows problems of payday loan through opinion of Rep. Alan D. Clemmons. According to the article, recently some states of the U. S. have attempted to ban or limit payday loans because poor people repeatedly use payday loan to solve their debts and many people who frequently use payday loan can fall in a deeper financial hole. In fact, many people have serious financial problems because of payday loan’s high interest rate. On the other hand, author exhibits necessity and advantage of payday loan through opinion of Jamie Fulmer. He supports payday loans, criticizes Clemmons’ bill, and emphasizes value of payday loan. In other words, he insists that payday loan is one of the most valuable financial supported services to help poor people and cash-strapped consumers. Also, he claims that payday loan’s rate of interest is never higher than other similar financial products, such as the bank fee and the merchant fee.
Basically, falling into debt is bad thing. Although there are many reasons to borrow money from lenders such as payday loan services, people should endeavor not to borrow money from other people. If people sincerely live themselves life everyday, people never need debt like a payday loan. Every debt like a payday loan can spoil not only borrower but also their family’s life. Also, lenders who derive excessive interests or benefits through borrower’s vulnerable points are the social evil. Although payday loans have bad factors, poor people and low socioeconomic status people continuously use payday loan services. We have to eliminate or restrict payday loans to maintain economically healthy society. First, payday loans’ operation system has a trouble because of its excessive interest rates. Second, payday loans can spoil not only borrower but also borrower’s family. Third, payday loans can bring about a social problem. Accordingly, People should try to avoid use of payday loans and the government and society should seek a suitable solution for poor people.
First, payday loans’ operation system is senseless because its interest rates are too high. Schafer (2007, para. 8) introduces that there are more than 22,000 payday advance locations in the United States that garner $6 billion annually in revenue through exceed 400% annual interest rates. Some article reported that payday loan service charge above 500% annual interest rates to borrowers (Adams, 2007, para. 4: Curtia, 2006, para. 10). Such incredible interest rates are never received with our commonsense. We can easily predict payday loans’ dangerousness through such excessive interest rates. If our society is extremely normal society, such unreasonable interest rates try to correct rightly.
Next, payday loan can spoil not only borrower but also their family’s life. According to the article from Schafer (2007), “Borrowers who can not pay often roll over the loan repeatedly, leading to more charges that can quickly add up and lead to a cycle of debt” (para. 5). In this manner many payday loan consumers repeatedly use it to pay off their fee or debt. Adams (2007) introduced some cases about payday loans victim. Lorrie and James Crouch have three children. They are disabled and have poor credit histories. The still owe about $3,000 to payday lenders. Lorrie said that “We had exhausted every other avenue. We were scraping just to feed he family. We were desperate” (para. 34-36). However, almost payday lenders do not check customer’s credit and customers just sign a few pieces of paper. At the end, customers can use any payday loans. Eventually they become to fall in a deeper financial hole. Their family also can fall into an unhappy bottomless pit. Moreover, such unhappiness can cause social problems such as a crime. People should consider to correlation between payday loans problem and crimes.
Finally, payday loans can bring out a social problem. We usually call the capitalist society as a mammon’s society. The payday loan industry well exhibits problem of capitalism like a mammonism. In the capitalist society, Generally lenders are the rich and borrowers are the poor. Eventually, this vicious circle can cause a lot of social problems and conflicts such as a crime. We sometimes can see crime related monetary through news. Payday loans customers can easily expose committing crime because they attempt to solve their financial problem through robbery, burglary, as far as homicide.
In conclusion, Almost of people who use payday loan services are poor people. They can easily fall into a deeper financial hole because of their bad credit and financial situation. They need to use payday loans because of their financial problem. However, they do not have ability that can independently solve their financial problem. Payday loans are a useless and bad thing in our society. First of all, payday loans charge customers excessively high interest rates. Next, payday loans can give a financial difficulty to borrower and borrower’s family. Finally, payday loans can bring about a social problem such as a crime. Accordingly, the individual try to achieve financial independence to avoid depending on payday loans. Also the government and society need to recognize such problem about payday loan and have to take an appropriate measure to minimize payday loan’s damage.
[References]
Adams. D. (2007). DEBT TRAP OR SAFETY NET? The Roanoke Times.Retrieved May 1, 2007, from http://web.lexisnexis.com/universe/document_m=df9580b12921dff24d2744e22abdf2a0&_docnum=1&wchp=dGLbVtz-zSkVb&_md5=71680ef3e242f8d95a34ebcf67a6e8cd
Curtia, J. (2006). States' payday-lender allowances cost families dearly.McClatchy-Tribune Business News. Retrieved May 1, 2007, from http://web.lexisnexis.com.proxy.lib.siu.edu/universe/document?_m=34a97f43d5381436334d9bb8d24c9d54&_docnum=52&wchp=dGLbVzz-zSkVb&_md5=c744fcf77f3da940499b1f155ba21f57
Schafer, M, S. (2007). Payday Loan Industry Acts to Quell Criticism. Los Angeles Times. Retrieved April 15, 2007, from http://www.latimes.com/business/custom/admark/la-fi-payday8mar08,1,4516617.story?coll=la-headlines-business-advert
Soldiers at Risk: Military Personnel Vulnerable to Payday Loans. (2004). Center for Responsible Lending. Retrieved April 15, 2007, from http://www.responsiblelending.org/issues/payday/briefs/page.jsp?itemID=28546770
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