The City Council of Salt Lake City is going to vote today on whether or not to regulate the spacing of payday loan storefronts. The proposal would limit payday lenders from having stores within a half mile of each other. Already existing stores would be unaffected.
Does this seem completely ridiculous to anyone else? What on earth is the goal of spacing payday lenders? A new payday lender will now be unable to get prime retail space because of where others already are. And in certain locations, so many lenders are within a half mile of each other, it would be literally impossible to set up a new store anywhere.
The idea is that it will limit how many lenders there are in SLC and how close they are to low-income neighborhoods. Supposedly the evil payday lenders prey on the poor, even though the median income of a payday loan borrower is $41,000.
I would ask, why aren't fast food chains limited in this manner? What costs America more, a $15 fee for $100 borrowed, or the enormous health care costs associated with obesity and unhealthy diets? Yet fast food chains can operate freely.
This blatant hypocrisy and pushing of a political agenda is sickening. What is the role of government? For the few in charge to do what they want for their own satisfaction? Or is it to do what is best for the people? Apparently facts are no longer used in determining what is best for the people.
Oh no, lobbyists do that just fine. After all, who could be more trustworthy than someone being paid by organizations with a vested interest in the legislation? Clearly unbiased, objective source of information there.
The fact is that over 90% of repeat payday loan borrowers pay their loans back on time. It simply isn't a problem. First time borrowers default less than 40% of the time. If payday lending is such a criminal offense, why do people keep coming back to get loans?
If they were really a ripoff, they would have been out of business long ago. But we're not. Payday loans serve an underserved community. People with poor credit have literall no access to short-term credit options except payday loans.
The alternative is bounced checks, NSF fees, late fees and other charges that make payday loan fees look like pocket change. Leave payday loans alone, the industry is self regulating.