Payday lenders are filling the huge credit gap

I wish everyone could borrow at 8% interest, but unfortunately, this is driven by our credit systems. The way things work is that you’re essentially placed in a risk group of similar borrowers. In this large group, the people that pay end up paying for the people that don’t pay.

This is the single hardest concept for so called consumer groups to understand.

This article does a pretty good job of explaining the payday loan industry in Illinois.

One comment, I think that it’s very disingenuous for Tim Riggenbach, manager at Associated Bank to tell people “There are options to payday loans. People need to talk to their banker.”

I want people to be able to borrow at the lowest rate available to them, but this is a joke. I know there are some credit union’s offering similar products, cheaper; but a bank will ask you what you own to find out if they can do a home equity loan or just run your credit. If they can help you, be prepared to wait two weeks and good luck. This is a big “IF”.

Interestingly, what we’re finding is that borrowers like loans that they can pay off in installments over 6 months.

There is a huge credit gap between 36% and 521%. Instead of capping rates, lenders should try and fill the gaps.

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