Payday Loans: No, no, no!
As most of my regular readers know, I tend to get a twitch and rant loudly when talking about payday loans and the places that give out this “alternate credit vehicle” (a term used by the industry). I have pontificated about this point many times, but now Stats Canada has put out a study about the growth of this financial alternative, and also who uses it. Perspectives on Labour and Income examines this whole industry in detail, but Stats Canada has put up a good summary on their web site about it.
Pay Day Loans Just Like the Great White, A Perfect Eating Machine
Three percent (3%) of families in Canada have admitted to using these kind of services in the past 3 years. The family’s main bread winner is typically between 35 and 44, which is also interesting (non baby boomers, more like Generation X’ers).
This quote makes me feel very sad:
Almost half of families who used payday loans reported that they had no one to turn to if they faced financial difficulty, significantly higher than for non-users (32%). More than one-quarter reported that they could not handle an unforeseen expenditure of $500, almost four times the rate for non-users. Nearly half could not handle one of $5,000 (17% for non-users).
Yikes, that really does mean we are living a little too close to the ragged edge these days and really need to think about how we spend our money.
I am not condemning you for using this service, but I do want you to think about how you can stop using these services. There are many different ideas out there on many different blogs and books you can get from your library, so please start a plan. Don’t feel like this is your only way to deal with this, because these Loan Sharks are not the answer to your financial survival, if anything they are the end of your survival, there is little chance of escape from these sharks. If you are paying 470% interest, your chances of getting out from under this is not likely.
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April 23rd, 2007 at 6:16 AM
Hey Cajun,
Where as I agree with you for the most part about PayDay loans, there is a certain sector of the population who uses them.
The very poor use these types of services because they get into a bad financial situation. It’s the only way they can survive sometimes.
With regards to their cheque cashing services, this is also very expensive.
Many welfare recipients don’t have bank accounts and use the cheque cashing service as an alternative to getting a bank account and paying service fees.
April 23rd, 2007 at 6:30 AM
No disagreement, but that is a damning statement about the Banks and the Governments, that they allow this to happen. Access to financial services, without HUGE service charges is disgraceful in Canada. There needs to be a way for the poor and needy to be able to use banks in some fashion. Forcing them to use these services is criminal.
–C8j
July 15th, 2008 at 7:37 AM
[...] The Carnival of Debt Reduction #85 is being host by Money, Matter and More Musings where they mention my Rant about Pay Day Loans. [...]
August 13th, 2008 at 4:50 AM
[...] turn off access to them). This morning I found a post I had done about pay day loans places called Pay Day Loans: No, No, No!! and in it, I had a picture of a great white shark to show what I thought of the pay day loan [...]