BAD CREDIT PAYDAY LOAN
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As a form of subprime lending, such as high interest rate credit cards, bad
credit payday loans are the subject of controversy. Some critics claim that payday lenders target the young and the poor, near military bases, and in low-income communities.
The people the critics say have bad credit and do not understand the time value of money.
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These critics generally reflect the views of "do-gooder" elites who abhor the messy and unplanned outcomes in
bad credit consumer finance markets. Rather than seeing payday lending practices as a creative extension of credit to households who may otherwise be without
access to cash loans, these do-gooders see it as yet another opportunity for government intervention in the name of "helping"
people who would rather see them just stay out of the way.
It is not that young soldiers or people in low-income
communities have bad credit because they do not understand
money. They have bad credit because at this period in their
lives they have low incomes, and because life sometimes
interferes with somebody else's due date.
The cost of processing a bad credit payday loan does not differ much from
their higher-principal, longer-term counterparts such as home mortgages.
Conventional interest rates at these lower dollar loan amounts and shorter terms
would not be profitable enough to stay in the payday lending business. For
example, a $100 one-week payday loan, at a 20% APR (compounded weekly) would
only generate 38 cents of interest, which wouldn't pay for the wire transfer fee
to process the loan. Besides, the real choice may be between a $30 loan fee or a
$50 reconnect fee. Even a do-gooder college professor should be able to understand that. No faxing payday loans are payday cash
advances secured by the borrower's post-dated check that includes the original loan principal plus accrued interest. The maturity date usually coincides with the borrower's next pay day. On the maturity date the lender processes the check traditionally or through electronic withdrawal from the borrower's checking account. Get cash in 24 hours
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