A Way To Manage

[cashlenders]

It’s easy for middle class bank customers to dismiss payday loans, but they provide a desperately needed service for low-income workers who don’t have a lot of options, said Mark Thomson, director of government relations and compliance officer for Moneytree.

“You have to realize that our relationship with debt is different,” said Thomson, who serves on the state trade association’s legislative committee. “You or I walk into a Best Buy, see a $1,700 flat-screen TV, and decide we don’t want to finance it. Without that loan, nothing changes in our daily life.

“For most of our customers, some adverse event is going to happen. They are going to bounce a check, or their utilities are going to get shut off, or they have to get a car out of the shop so they can get to work.

“There’s already something about to happen to them, and they’re trying to find the cheapest way they can to manage it.”

Payday loans are one way to do that. For some, it’s the only way, because they don’t have good credit and can’t access a credit card or a loan from a traditional bank, Thomson said.

If payday lenders go out of business, subprime borrowers will have nowhere to turn, and with a 36 percent cap, California’s payday loan industry will die, Thomson said.

Profit margins are low already, he insisted. Fees are just high enough to cover loan defaults and the cost of doing business.

Consumer Credit Counseling Service of Kern and Tulare Counties is a nonprofit organization that helps borrowers get out of debt and offers budget management classes.

CCCS doesn’t have an official position on capping payday loan interest rates, but it advises clients not to borrow from payday lenders, said president and chief executive Katy Hudson.

“It’s much better to set up a budget and contribute regularly to savings so that when those emergencies come up, you’ll have those savings in place to draw from,” she said.

source: bakersfield.com