That's a bit like people who are against buying clothes made in countries where workers aren't paid much compared to Western standards (I'm not talking about slavery or small kids being forced to work, just regular textile work in a poor region). When you ask them what's good about all these people losing their jobs and probably not being able to find as good a source of income elsewhere to support their families and send their kids to school, they hand-wave it away.

Some people are against things that they find unpleasant, without realizing that the alternatives are often even worse. What matters is that they feel good about the choice, not that the person who has to live with the decision is actually better off.

It's easy to make a choice between a good thing and a bad thing. But when the choice is between two relatively bad things, some people just want to wish the whole dilemma away, which is often counter-productive in the end.

Great comment Michael - good insight. Yeah, lots of people think, "This is no good", not realizing that it's the better of the alternatives. They'd rather put their head in the sand than actually do something. Good comment.

People who get payday loans default ALL the time. Some run straight to the bank and try to put stop payments on it as soon as they leave the shop. Plus it's hard money lending.. These people have derogatory credit, shady income, or are straight up cashing stolen checks many times. It's an ugly business to be in.

> It’s an ugly business to be in.

Yup. Supply and demand... if the rates were artificially, unfairly high, someone else could easily come in and clean up, make good money... barring artificial barriers, prices come down to a natural equilibrium. When the equilibrium seems not right to someone, they've got two options - try to come in and do it better, or complain about how horrible it is while doing nothing. Most people pick the latter route, of course...

If you make 36% on a loan, how can you not stay in business? If the borrower is crap do not lend him any money. You are doing him a favor. And you will be blessed.

> If you make 36% on a loan, how can you not stay in business?

Huge difference between making 36%, and 36% APR.

36% APR on a $500, one-week loan is $3.50... would you take $3.50 to loan someone $500 for a week? I wouldn't.

A great article with interesting discussion points rather than the usual useless factually incorrect SEO writing that is so prominent in most articles discussing the subject.

I would like to thank you Sebastian for taking the time to understand it from both the lenders and customers point of view, and totally 100% agree that the loans should be avoided if it can be helped - more a last resort than a loan of convenience.

Some really interesting points, and a great analogy Michael G.R (comment).

I agree with the man that you speak of in this article. It's a high risk field, so of course the penalties are going to match. A payday loan can be a lifeline for some people. I find it interesting when the upper-middle class debates issues that they really have no understanding of. There are responsible people who do not have the luxury of falling back upon a quick loan from wealthy parents and may not have any other form of collateral when it is needed quickly.

It is very much better to understand what is payday loan all about. Every person uses payday advances that's why there is such a big interest in them. If there were no payday lenders, people would still borrow cash, though it would not be regulated and would end up hurting more than helping. That is why government authorities need to stop trying so hard to limit and do away with payday financing industry. Learn more here