Payday Lending Research Paper

Payday lending provides a needed service to people in a desperate state. These lending companies profit off of the disadvantaged customers looking for a way out of their financial predicaments. Despite this, the need for these types of loans is increasing around the world. The payday lenders are feeding off of the increase, by establishing shops worldwide. People are in need of an escape from their financial dilemma, and payday lending is not a good way out. The payday lending scheme is not a good financial decision for one’s short or long term financial goals.
The payday lenders are targeting groups of people that will keep them in business. They target selected groups that they can benefit from the most. Unlike other businesses, payday …show more content…
“Warning: a small loan is not intended to meet long term financial needs. A small loan should be used only to meet short term cash needs. Despite regulators forcing payday lenders to post this announcement, borrowers often do not heed the warning and extend their payday loans for months by paying the interest on the loan and prolonging the repayment until the next period—a process called rolling over” (Carter 436). Millions of low-income people used these types of loans, and most of them ignore the warning. Payday loans are clearly needed by the low and middle income class to help with an emergency. This warning doesn’t catch the borrower’s attention, because they are focused on getting their life back on track. “Borrowers typically are already stressed when they begin paying on their payday loans. And payday loan applicants typically borrow repeatedly” (Edmiston 67). The borrowers are in this cycle of rinse and repeat. Borrowers are taking these loans to stay stable, but have no way of paying off the loans after the fact. Borrowers see a solution for their immediate problem and do not make the funds to get them out of the loan. Payday lenders take advantage of people in these situations. They continue lending loans and building new locations to lend even more …show more content…
“The enormous growth—and potential—of Mexican market is the result of an immense population without serious access to credit as well as an almost complete absence of meaningful regulation over consumer credit” (Aitken 391). These are the types of places in which payday lenders thrive. They do not care about the consumer. Profits are their main priority. Trying to find new locations, like Mexico, is also important to them. United States was a test run for these companies. According to the data they obtained through American locations, they needed to build locations in areas that do not tightly regulate consumer credit. “EZCORP, a large American provider of consumer finance of various kinds, and a firm that has been on the vanguard of payday loan globalization, announced it cancellation of an attempt to purchase a controlling interest in a large Australian payday lender four day after the announcement of Australia’s new cap on payday loan fees” (Aitken 388). EZCORP in this situation new that the company would not make as much money, if they went ahead with the purchase. Finding the best place for one’s business is a common practice, yet to find a place to establish an income that is taking advantage of people is not common. This is the practice of payday lenders. American society stood up against this kind of practice before. Sharecropping was common in the United

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