Smart Spending

How Desperate Would You Have to Be to Use a Pay Day Lender?

What would you pay if your car were broken down; you had no means of getting to work, no credit, no bank account, no friends or family that could help and no access to public transportation. What if you had no other way to make a living unless you were able to get to a job twenty miles away that you were in danger of losing if you couldn’t get there?

Would you be willing to pay more to get help from a pay day lender today to keep your job, avoid unemployment or worse?

What if your child is sick, your brother-in-law needs bailing out of jail or your lights are about to be turned off? Isn’t it better to pay $15 to a pay day lender for $100 than pay $50 for a reconnect fee or $35 for an overdraft charge, even with the knowledge that, according to all that know better, this is not a good deal for you, the consumer? Just how desperate would you have to be?

That’s the situation many who use payday lenders are faced with everyday. And, why the website of the CFPB, the new agency charged with consumer protection, had more than one comment from payday consumers themselves who did not want the agency doing away with the practice.

What would our grandfathers have done? Walked, let the brother in law rot in jail, traded a cow to provide the care the sick child needed? Could he have counted more on his neighbors and his church than we can today? Or, would the shame of owing money have been too much for him to bear?

It would surprise many to know that loan sharks have been around for as long as there has been a need for help in emergencies and were not always associated with the Mafia or people of low repute.

Loan sharks in the 19th century, in fact, made their money loaning money to respectable married men with jobs they could blackmail with the threat of outing them to their bosses if they didn’t pay back the money. Not being able to pay a debt would have guaranteed dismissal such was the shame of not paying one’s debts in those days.

In the past, laborers who had emergencies–agricultural workers and mineworkers–were both taken advantage of and taken care of by the farmers and mining companies who employed them and kept them living from paycheck to paycheck, proving it is not the modern day phenomenon we think of it as being today.

The song “Sixteen Tons” made popular by Tennessee Ernie Ford in the fifties told of this when he sang, “Sixteen Tons, what do I get? Another day older and deeper in debt” and concludes with “St. Peter don’t you call me, ‘cause I can’t go. I owe my soul to the company store.”

Is this just the price we pay for living in a land of opportunity? We all have the same opportunity to save, not save, spend, not spend, right? So why do we need pay day lenders?