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Mon Mar 26, 2018, 03:10 AM

Payday loans gone, but need for quick cash remains

For 15 years, South Dakota residents who needed a small amount of money in a hurry could turn to storefront lenders who made so-called payday loans at annual interest rates that could rise well over 500 percent.

The industry thrived, and payday lending businesses that made loans on a weekly or monthly basis popped up by the dozens across the state.

But in late 2016, after a heated campaign that highlighted how some borrowers got trapped in a cycle of paying excessive interest and fees, South Dakota voters overwhelmingly approved a measure limiting the annual interest rate on short-term loans to 36 percent.

The new rate was a deadly blow to the industry. When the 36 percent annual rate is applied to loans made only for a week or a month, it made payday loans unprofitable.

Read more: http://www.capjournal.com/news/payday-loans-gone-but-need-for-quick-cash-remains/article_4b3b74de-2e5e-11e8-8dc5-c7f64085e760.html

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Reply Payday loans gone, but need for quick cash remains (Original post)
TexasTowelie Mar 2018 OP
Stormdash Jul 2020 #1

Response to TexasTowelie (Original post)

Wed Jul 8, 2020, 03:29 PM

1. The problem is that they have exorbitant fees.

Last edited Sun Jul 26, 2020, 11:46 AM - Edit history (2)

payday loans in USA aren't nearly as bad as people like to think.
1. it's one of the few sources of credit for a segment of the population.
2. the crazy interest rates mentioned in the news are annualized, but payday loans are meant to be short term.
3. payday loans are very small, so there'd be no profit without the fees and the rates charged.
4. the default rates are sky high, so they don't make much money.
5. if payday loan places were closed down, then a segment of the population would lose a critical source of short term credit.
it's easy to demonize an industry, but like all things, the issue is far more complex than can be stated in a single comment.

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