The payday lenders offer a good service to people who find themselves in an emergency.  They work with people to pay the loans back MUCH better than credit card companies do, and they don’t kill them on interest either, like they do!  It’s definitely a good thing to have them around.

Most of the points said here on behalf of the industry are misrepresentations of the truth, and came straight from the payday loan industry’s lobbyists.
Some of the very same businesses that operate today offering payday loans were here before 2002 offering them by exploiting a loop-hole in the law. They were untruthful then, and similarly so now.
Go to http://www.predatorylendingassociation.com to see the truth.
As far as credit cards go, it is all how you look at the terms. APR was instituted by Congress to allow people to compare products of any type by the same standard. For example, if I am looking at a 18% APR on my credit card and 15$/$100 on a payday loan, if I intend to pay either of them back in 2 weeks, I would pay 0% APR on my credit card (because I have 20 days to pay if off interest free), or 391% APR for the payday loan, no matter how much money I borrow. Yes, a late fee is bad, but it is a penalty for not following the rules, and is not an interest or finance charge, like the fee on payday loans are.
Many of the 58 credit unions that offer alternative products do not require membership, and if they do (in many cases $5), they have the person put that small amount into a savings account each time they take out a loan, so that eventually they build up a saving so they do not need those types of loans.
On Bankruptcy, there is actually a correlation between people who have payday loans and people who file for bankruptcy. Right here in Virginia, there are attorneys who see about half of their bankruptcy clients also have payday loans, today with payday loans. But let us be clear, someone doesn’t go into bankruptcy just because they couldn’t get a $300 payday loan for two weeks. They go into bankruptcy because of major life shifts, such as an accident or disability which affects their ability to work, or loss of job, etc. If payday loans are used for small cash emergencies, as the industry says, then their absence wouldn’t have much of an affect on a person on their way to bankruptcy. However, I do see many people who are on their way to bankruptcy use payday loans to stave it off, but unless their circumstances change, such as getting more hours at work or a better job in general, the payday loans only help drain their finances and push them deeper in debt.
Talk with credit counseling agencies and bankruptcy attorneys, who see the realities.
Please look at the Bureau of Financial Institutions. They even say that $268,000 were paid to payday lenders by borrowers for NSF/bounced check fees. Of the 95% pay off figure, by reading BFI stats, people come in to pay-off their loans, but then immediately take out another one, so while they did pay off the original loan, they couldn’t survive without the money, so they have to get another one, which is just a matter of semantics whether that is rolling over a loan. 75% of borrowers take between 2 and 13 loans annually from one lender. That doesn’t account for those who get loans from a second or third lender at the same time.

I’m sure payday lenders are a great idea coming from a payday lender in Provo, but I’m glad a Virginia resident, voter, and tax payer can add a point or two to the discussion.

There are so many points that are alarming that I don’t know where to start, but allow me to focus on a couple that are of particular concern to me.

As a former manager of a payday lender in Virginia I feel qualified to address specific points that seem to have swayed your support. The notion that 95% of borrows payback their loans is a notoriously manipulated statistic used by the lending industry like cool aid on a hot summer day. Sure they pay back their loan, but because of the outragious fees placed against a loan that was issued with no regard to debt to income ratios the borrower has no choice but to take another loan. Without it they would not survive. That is the simple fact that cannot be avoided or dismissed by the industry or anyone else.

Think about it for a moment...how does this industry survive and make billions annually? Like many businesses it is through the repeat customer. AS a manager you are trained to focus and coax the customer into a repetitive loan pattern in order to keep bringing in fees.

Why do they have repeat customers? Really, who in their right mind would want to continue to pay these ridiculous fees? No one, but they have no choice because the predatory practices of payday lending artificially creates a market and their customer base. The customer has no option but to take another loan.

In terms of paying it back, the customer will do so for as long as they can. Once the fees become more than they can keep up with they will take a second loan and a third and so on until one day they simply default. It is an inevitable reality that the majority of customers face. They will default.

I could continue to lay out this pattern and the unethical practices of this industry, but I would like to address at least one other point.

You suggest that credit cards are an unattractive alternative. However, I contend that at least you have an opportunity to make a minimal payment without having to pay the full amount owed a week after you obtain a balance. I’ll take a 35 dollar montly payment over giving up my entire paycheck anytime.

You also mentioned the fact that these lenders are willing to allow customers months to payback a loan. That is simply not true. While the industry has no choice once a person defaults, do not kid yourself into thinking they are patiently waiting for the customer to make monthly payments. They are taught to harrass customers as often as they can. After a short time they will simply turn the account over to a collection agency and allow them to do their dirty work. It is an ugly reality that few people who have not experienced it can understand, but I have witnessed the devestation first hand.

I closed peoples checking accounts by the dozens. I helped take one person’s home. I hurt them and watched them slowly lose everything and my job was to provide a “solution” by giving them one more loan and take one more set of fees right before their world came crashing down around them...and we suggest that this is a better alternative to borrowing from friends or being forced to seek out a consumer credit counseling agency?

Shame on us for being so presumptuous…

Thank you for the opportunity to address this issue and I am more than willing to discuss more details with you if you so desire.