For Most Payday Loans Are Not About the Interest Rate

Jamie Fulmer, is a senior vice president at Advance America, one of the nation’s largest payday loan companies with operations in 29 states. He says,

96% of Advance America customers rate their customer experience good to excellent.

I’m not sure how they came up with this number, but the numbers do not lie.  People keep coming back and borrowing.  Good or evil, the demand is there.

The biggest problem is that the consumer watch dogs and the government agencies, for the most part, do not understand the payday customer.  They do not realize what the borrower is up against.

  • Getting your electricity cut off costs money in fees and penalties.
  • If you’re car breaks down, how do you go to work?
  • Over drawing an account has expensive NSF fees associated with it.

For the payday customer, it’s not the interest rate.  It’s the opportunity cost of not having $500 dollars.  This opportunity cost can be equal or larger than the fee on these loans.

Also, the payday loan detractors think the borrowers are stupid.  That’s unfortunate.  Maybe you say bad decision makers or financial undisciplined, but they know the cost of these products.

If people really wanted to help the payday customer, they would find ways to help build their credit.  Unfortunately, it’s hard to get positive payment data back to the big three credit bureaus.

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