Never Payday: An Electoral Guide to Fast Cash Loans

Election 2

The best politicians are the ones that keep their promises and the same is true with fast cash lenders…

Tonight is the final night of the Democratic National Convention, which begs the question … are you sick of the election yet? Fear not, there’s only … oh boy, three whole months to go! What makes election season so difficult to stomach? Maybe it has to do with the unending tough talk, lofty promises, and bombshell revelations. In many ways, it’s not that different from the experience borrowers have when shopping for a fast cash loan.

Lots of lenders make big promises about their fast cash loans, claiming they’re short-term only, reasonably priced, and a cinch to repay. The only problem with these promises is that they’re mostly untrue. They’re like a politician’s stump speech — nice to hear, but how much can you really believe?

To get a better idea of which fast cash loans to avoid and which to trust, why don’t we hold a little election of our own? No superdelegates or caucuses or Gallup polls or any of that, just a straight up-and-down vote. May the best loan win.

Meet the Fast Cash Candidates: The Good, the Bad, and the Title Loans

  • OppLoans Personal Installment Loan: This installment loan loan comes with a larger principal ($1,000 – $4,000), a longer term (6 to 36 months), and a lower interest rate (70 – 125% less than other lenders). The loan is amortizing, which means that it’s paid off in a series of regular, fixed payments.
  • Payday Loans: Payday Loans are small-dollar, unsecured cash loans, with a typical loan amount of $350, an average term of 14 days and standard interest rate of $15 per $100 borrowed … which works out to an annual percentage rate (APR) of 390 percent.[1]
  • Title Loans: These loans are secured by the title to the borrower’s car, truck, or motorcycle. The average loan amount is just shy of $1,000.[2] Title loans are usually one month long, with a monthly interest rate of 25 percent and a 300 percent APR.[3]

The Primary: The Least-Worst Option

Payday and Title Loans both belong to the Predatory Lender Party, while OppLoans is running unopposed as the nominee for the Safe and Reliable Party. Let’s see who OppLoans will be up against in the general election…

The race is a tight one. Payday Loans promises that their fast cash loans are only meant to “bridge the gap” between current expenses and future income. But Title Loans points out that over 80% of payday loans are the result of loan rollover: they’re extensions of previous loans or are taken out immediately following a previous payday loan.[4] Title Loans cites data from the Consumer Financial Protection Bureau (CFPB), stating that the average payday loan customer takes out 10 loans a year![4]

Of course, when it comes to rollover, Title Loans doesn’t have a leg to stand on. According to the CFPB, 80% of title loans are also rolled over from previous loans.[2] In the arena of dangerous and widespread use of loan rollover, it would seem that the candidates are evenly matched.

In the end, it comes down to the fact that one in five title loan customers lose their car when they default on their loan.[2] Although the final vote is close, Payday Loans wins out. And with OppLoans winning its primary east to west, the stage for the general election is now set.

The General Election: A Better Kind of Fast Cash Personal Loan

Payday Loans claim their short repayment terms are superior to OppLoans’ long-term structuring. Why does an annual rate matter when you’re only in debt for two weeks? That argument might work, except the average payday loan customer spends almost 200 days a year in debt![4]

Payday Loans tries to argue that their customers wouldn’t spend so much time in debt if they just paid their loans off on time; in other words, it’s the borrowers’ fault. But study after study, from the Center for Responsible Lending,[5] the Pew Charitable Trusts,[6] and The Kansas City Fed,[7] all show that the opposite is true: payday lenders depend on this predatory debt cycle in order to make a profit. Without frequent repeat borrowers, the payday lending industry would be kaput.

Finally, OppLoans points out that the average payday loan customer can only afford less than $100 towards payments — far, far less than the average of $430 that they owe on their lump-sum repayment.[8] In short: payday loans are difficult to repay by design.

Election Night: The Results Are In!

OppLoans wins in a landslide! Their safe and affordable personal installment loans are clearly the best loan for people in need of fast cash. Folks with bad credit around the country rejoice; no longer do they have have to repay their loans all at once or risk a costly extension. Now borrowers can pay off their fast cash loan over time through a series of regular, fixed payments. (Budgets nationwide also breathe a sigh of relief.) And with customers rating OppLoans 5 out of 5 stars on Lending Tree and Google, it looks like they’re going to be in office for a long, long time.

Vote for more responsible lending by clicking “Apply Online” below!


References

  1. “Payday Loans and Deposit Advance Products.” April 24, 2013. Accessed July 20, 2016. ConsumerFinance.gov
  2. “Single-Payment Vehicle Title Lending.” May, 2016. Accessed July 26, 2016. ConsumerFinance.Gov
  3. Montezemolo, S. “Car-Title Lending.” July, 2013. Accessed July 26, 2016. ResponsibleLending.org
  4. Burke, K., Lanning, J., Leary, J., & Wang, J. “CFPB Data Point: Payday Lending.” March, 2014. Accessed July 26, 2016. ConsumerFinance.org
  5. M Parrish, L. & King, U. “Phantom Demand: Short-term due date generates need for repeat payday loans, accounting for 76% of total volume.” July 9, 2009. Accessed July 26, 2016. ResponsibleLending.org
  6. Bourke, N., Horowitz, A., & Roche, T. “Payday Lending America: Who Borrows, Where They Borrow, and Why.” July, 2012. Accessed July 26, 2016. PewTrusts.org
  7. DeYoung, R., & Phillips, R. “Payday Loan Pricing.” February, 2009. Accessed July 26, 2016. KansasCityFed.org
  8. Bourke, N., Horowitz, A., & Roche, T. “Payday Lending America: How Borrowers Choose and Repay Payday Loans.” February, 2013. Accessed July 26, 2016. PewTrusts.org

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