Repair Your Credit | Myths and Meaning (Pt. 7)

A potpourri of payday loan myths and facts

You’ve reached the end of my exploration of the facts and fallacies of cash advance loans in your guide to “Repair Your Credit.” If you missed the previous segment of this article, CLICK HERE.

Let’s finish this chapter, shall we?

Payday lenders make “obscene” profits off consumers

Studies by Doctors Lehman and Kilmer show that “as a percentage of revenues, profit margins for payday lending stores are lower than many other businesses, averaging between three and eight percent profitability.” Sure, that’s a profit, but it’s hardly obscene. To give you a frame of comparison, researcher Aaron Huckstep reports in the Fordham Journal of Corporate & Financial Law how the profitability of payday loan stores compares with large commercial lenders and the retail giant Starbucks. Huckstep finds that payday lenders profit less (7.63 percent) than both the commercial lenders (13.04 percent) and Starbucks (nine percent). Payday lenders are businesses, and in order to stay in business, there must be some profit.

Personal loans “strips” money from communities

There is an exchange of services going on here. There is a cost to the consumer, but they are receiving the benefit of the loan. No critic has stepped forward with a cost-benefit analysis that proves this claim. ... click here to read the rest of the article titled "Repair Your Credit | Myths and Meaning (Pt. 7)"