Is a payday loan lender actually a loan shark in disguise? Payday loan outlets are popping up everywhere. They appear on the surface to be legitimate, but are as vicious as the loan sharks who took care of gambling debts by breaking someone's legs back in the 1930s. These modern-day loan sharks break your spirit by the spiraling effect of high, uncapped interest rates on minimum-wage salaries. They are by definition predators. A predator is not only a thief who steals something non-tangible, like your innocence or faith, but predetermines to cash you in for all the blood money that can be siphoned from your soul in its desperate quest for survival.
Like the shark who literally smells vulnerability, the blood of its victim, payday loans open their jaws to those who have jumped in over their heads or those who have been pushed overboard by society. The fact that quick fixes never really fix anything, is a lesson that I have come to learn the hard way. Quick money through non-regulated loans or instant credit is the quickest way to lose everything you're trying to fix!
Payday loans prey on the working poor, those who live check to check. When that check will not stretch for the infinite variety of justifiable reasons - such as illness, accident, car breaking down, needing glasses, needing a cavity filled, getting laid off, and on and on I could go - output exceeds income and something gets sacrificed in the equation. When I walk through the streets of Portland, for example, I see all too tragically the sacrifices people have to make because of low wages and high rents.
When drowning, it is instinctual to grab anything that can keep you from going under. Payday loans appear on the water as buoys, though once you climb on you can feel their teeth. There is an Oregon Division of Finance and Corporate Securities. However, do not let the title impress you, as payday loans in Oregon are not regulated. Therefore, there is not much anyone can do to rescue you when drowning in the debt accumulated from the unlimited interest rates of these lenders.
If you borrow $300 and the cost of the loan (the fee you pay the lender) is $45, and you cannot repay the loan when it is due, and you renew it three times, you could end up paying $180 in fees for the $300 you borrowed. That is why it is so important that you understand your present and future financial situation before you obtain a payday loan.
This reminds me of a warning on the side of a cigarette box.
The average APR, annual percentage rate for these loans in Oregon is 521.21 percent. That is more than 500 percent interest! On the East Coast it has gone as high as 700 percent annually. Diana B. Henriques wrote in The New York Times on Dec. 7:
"The interest rates they are paying are stratospheric. In Washington state, for example, the annual rates on a two-week payday loan are capped by law at just above 391 percent, but the effective annual rate on short-term loans is even higher, and Internet lenders are not subject to these limits. Some payday lenders near military bases in other states have charged annual rates as high as 780 percent, court exhibits show.
"And yet business is booming, industry analysts say; the total payday loan volume nationwide increased fourfold, to $40 billion."
If your relationship with the lender is a one-time deal and there is no late fee, you get away with a slight money loss. But the very nature of the problem that has you in the loan office to begin with - the deficiency of your input to meet your output - logically would have you unable to pay back the loan on schedule. If you do not have the money when you walk in and you are giving them $20 on the $100, do the math, it is almost an air-tight guarantee that you will not be able to meet their payments promptly. The sharks begin to feed through this blood money on the water.
The good news is that there are people who care and are demanding that these payday loans be regulated or prohibited. Case in point, New York and North Carolina. The non-profit organization called OFRAH, Oregon Faith Roundtable Against Hunger, is going to Salem on March 7 to address this issue as well as other root sources of poverty in Oregon. I will be there to let you know the results through street roots.
The problem of poverty is multi-layered and there is no quick fix. Nonetheless, every step is an essential part of the solution. I believe greed and apathy are the sharks that circle the vulnerable in society. To remember how close we each are to being the one who gets pulled under by the gluttony of unethical business predators, is a beginning to the end of these inhumane shark feeds. No more blood in the water.