An annual interest rate cap of 36% would result in the elimination of an affordable credit choice for consumers.

At a 36% APR, the total fee charged on a $100, two-week advance would be $1.38. Payday advance lenders could not cover the cost of originating a loan, let alone meeting employee payroll and benefits and other fixed business expenses.

For example, Goodwill, a non-profit, tax-exempt charity, charges customers almost $10 per $100 borrowed (i.e., 252% APR) for their “Good Money” payday loan. Even though they are only trying to break even, the Goodwill could not offer the product under a 36% rate cap. For-profit payday lenders typically charge $15 per $100 borrowed while also paying taxes, employee salaries and health care, rent and overhead costs. The $5 more they need to break even, pay taxes, make a profit and keep their businesses running makes sense for borrowers, employees and the tax coffers.

But then you have to figure, if the guy is single and lives in California where there are so many beautiful women, he probably doesn’t end up with a pot to piss in.

Unless he’s gay…

Thus, the lender will only earn money on $1.41 million of loans.

$1.41 million x 15% = $211,500 in total fees

So instead of the store netting $114,000 in profit, it only nets $101,500?

Then, if the store owner is single and lives in California, he ends up with a little over $60,000 in take home pay - if he doesn’t contribute a penny to his retirement account.

In any event, thank you, Lawrence Meyers, for your great writing in defense of the terribly maligned payday loan industry.

The fees are higher b/c they have to absorb the people that do not pay. It’s just like any bank or credit card company.

I also think the 6% charge off number is low. It’s closer to 10%.

Perhaps things are different in Virginia. But then, Virginia isn’t the entire country, is it? It’s what we call an “unrepresentative sample”.

As for your tired trope of “preying on the poor”, you clearly have never needed a short-term cash advance, have never visited a store, talked to owners, talked to customers, or done any research at all.

I’d point you in the right direction, but since it sounds like you’ve already made up your mind, I’ll just lump you in with the rest of the ignorant ideologues.

paydayloanfacts.org

These companies, by their very nature, prey upon the poor – when was the last time you saw one of these companies in an affluent neighborhood? However, go into any poor section of town and you will see one on every street corner – right next to the liquor store.

Now, why don’t you write a story about how good cigarettes are for folks