This question was raised during a comment exchange at Loren Steffy’s blog.

“Bias” is defined as “A preference or an inclination, especially one that inhibits impartial judgment”.

The question is whether I am judging the issues impartially.

Readers should ask if I look at both sides of the issue.  Do I examine the pros and cons of these loans, the lenders, the borrowers, the media, the politicians, and the third parties with interest in the issue?

“Unbiased” doesn’t mean I can’t render any judgment.  It means I claim to judge the issues impartially.

A set of facts is presented.  I evaluate them fairly.  So far, I haven’t seen much evidence to support the claims of opponents.  I see a lot that supports the claims of proponents.

Perhaps that will change.

Let’s take one example, the most common complaint I hear about payday loans.  This complaint is:  “They charge 390% APR”.

Yes, they do.  $15 for a hundred dollar loan over a two week period is a 15% fee (or interest).  If this loan went for a year, it would be a 390% APR.

That’s a fact.

But it doesn’t tell the whole story.  One does not render judgment without hearing the entire case.

The loan is for two weeks, not a year.  So the APR is only applicable when compared with other credit products that run for a year.

So how does one judge price on a two-week loan?  You compare it to the cost of other two-week loans, such as pawnbrokers, auto title loans, a credit card cash advance, and so on.

Do customers select payday loans or other credit products based on APR?

They do not.

If you refuse to accept that assertion, then go to a payday loan store, ask some customers and lenders about it, and get back to me.

So, my conclusion is that APR is irrelevant.  It does not matter to the borrower.  It does not matter to the lender.  It doesn’t follow common sense.

Does that make me unbiased?

No.  I began from a place of impartial judgment.   I ended with a reasonable conclusion.

You are free to challenge it.

Please visit me at the only nonpartisan payday loan website:

http://www.paydayloanfacts.org

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