In “Unconscionable legal loophole in lending law” (9/5/12), both the Ledger-Enquirer and Alabama Arise inadvertently make the case for payday loans, acknowledging there’s a need for short-term credit, but that neither credit unions nor banks want to offer a product. That’s why the Deferred Presentment Services Act (DPSA) was passed in the first place (and is a law, not a “loophole”). Payday loans offer an additional option that is neither the most nor least expensive among the others: borrowing from a friend or employer, credit card cash advance, pawning an item, or bouncing a check. It is not, as the editorial staff claim, the “only route open”, nor is the loan “usurious”, fitting neither the legal nor even religious definitions of the term.

Further, the editorial is short on facts. Alabama Arise demonstrates the perpetual arrogance of payday opponents, that borrowers allegedly aren’t aware of all their options. That’s nonsense. Americans are great at two things: shopping for the best deal, and complaining. Alabamians know how to shop for the best price for credit, and the 0.5% complaint rate proves widespread product satisfaction. Were the product as harmful as claimed, it would not have survived since 1990, having chased off the entire customer pool. Instead, twelve million Americans choose payday loans annually over all other options. Are we to believe that for 22 years, millions of Americans repeatedly choosing payday loans because they don’t know any better, or is it because they know exactly what they are doing?

The editorial misses another fact: Sec. 5-18A-12 of the DPSA prohibits more than one renewal, forestalling any possibility of “the debt really begin[ning] to snowball”.

As usual, it is only opponents of the product who insist on finding a problem where one doesn’t exist. Worse, in their zeal to ban the product, they no doubt have missed the study by the NY Federal Reserve, “Payday Holiday”, which showed that after bans in NC and GA, consumers were worse off.

People can make their own decisions.

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