Fixing Payday Lending

Suggested by David Kennedy over 4 years ago

A lot of people have no idea just how predatory payday lending and other short-term lending options truly are. The APR can quickly climb as high as 600%+ in some states. I'm also worried for the Buy-Now Pay-Later trend.

I doubt very many of you have ever spent much time in Mississippi. There's a lot of really great people there though who struggle with poverty unknown to many parts of the country. It's typically the most obese state in the nation year-in-year-out, but get this--payday lenders outnumber McDonald's 5 to 1. I'm just using it as an example because I've just happened to see how abusive the practices are there.

That tells me that there's more money in selling payday loans to poor people than there is selling low cost hamburgers and sodas, which would be great if the folks weren't left all the poorer for it in the end.

These folks keep up with a list of the worst places geographically speaking. Rankings and data. I'm not well-versed in their methodologies, but their lists pass my smell test. A lot of southern cities at the top of the list of worst offenders.

https://debthammer.org/cities-with-the-worst-payday-lending-problems-study/

This is an issue that we cover at Lequity, but for those of you that know what we are doing, Lequity is obviously not going to be set up to tackle this problem whatsoever.

Inflation and rising interest rates are hammering poor people harder than anyone. Inflation is very similar to a sales tax in that, it is regressive by its very nature as far as I know. It's a cliche to an extent, but payday lending is one of the ways that many disadvantaged people end up getting poorer.

Also, the state governments have made clear where their allegiances lie, and it isn't with the disenfranchised, low-income people. Coincidentally (or not), the states with the most exploitive payday lending practices also tend to be the states where poverty hits hardest.