The Texas Observer printed an article today that went on the offensive against payday loans. It was a typical tirade, blasting interest rates, calling lenders predatory and trying to defend their poor sob story. Not only was it lacking any balance whatsoever, one might think the author was not even trying to eliminate bias.
I’m not sure what they teach in journalism schools in Texas, but facts are usually reported in news by journalists. They wonder why newspapers are failing across the country…could it be no one wants to read their tabloid editorial garbage anymore? But I digress…
This is one of the better sob stories I’ve ever heard. The article opens with the anecdote about Isamar Lanusse. This Austin resident makes $27,500 a year driving senior citizens to their doctors appointments. She is a single mother with one daughter.
She says her mother raised her as a single mom on welfare, and she always wanted better for her own family. In her mind, the first step to financial stability was through home ownership. Never mind that an income of $27,500 could only get you a home for around $70,000 or so, which homes are almost non-existent. At least 4 years ago they were.
But Lanusse decided she needed to own a home and wanted to get started on the paperwork. Unfortunately she needed $200 for initial paperwork fees and was days from her next paycheck. She saw a big flashy sign for a payday lender and decided to give it a try. And that’s when she claims she was trapped.
“I got trapped in a cycle,they would offer me more money and then charge me 500 percent interest plus fees. It was a mess.”
But she got luckier than many. By borrowing money from family members and skipping utility bills, she escaped from the loans that had quickly amounted to $1,000. Oh, and needless to say, she didn’t get the house.
There are so, so, so many things wrong with this pathetic sob story. First, she wanted to buy a house but couldn’t come up with a mere $200. Excuse me, you can’t afford $200 in paperwork but you want A HOUSE?!?! There is something so terribly wrong and uneducated about this woman already.
Second, she says she was days away from her paycheck. For argument’s sake we’ll put it at 10 days. At the 500% APR she claims, that $200 loan would be about $28 in interest. Someone making $27,500 a year makes $1,057.69 each paycheck if paid every two weeks. After taxes, about $800 or so.
So she needed to skip utility bills and borrow money from family to pay back that monstrous loan? She needed to get more loans to pay off that original loan? She went through all this to get up to $1,000 in loans and sacrificed so much to pay them back.
Keep in mind….she wanted A HOUSE!?!?! This story is so mind insanely blowing! How could anyone POSSIBLY fault the lender in this scenario? Could this woman have possibly known any less about finances? Clearly this is a complete lack of education and understanding.
And that’s why I may sound like a broken record, but look at the evidence our critics are supplying us? Payday lenders are not that bad guys! Uninformed and uneducated people are the problem here!
Millions of people use payday loans responsibly each year. Let’s ask them if they feel like they are a ripoff! Not the rare exception who manages to break every rational norm! Payday loans need to government meddling, what we need is better education of our citizens so that those who shouldn’t be getting loans don’t get them.
