Payday Loan Lenders
From Radical Reference Wiki
It depends on your financial situation what you are likely to think of payday loan lenders. If you are very rich then you probably think that they are very unfair and that people should not be suckered in by the fast payday loans that they offer. However if you are just scraping by, and have had to use one, then you probably think that they are a brilliant, essential service that is being offered. This is not particularly unusual, the people who do not need a thing often see it as being useless. People who do need a thing though see it as being very valuable. You could apply that to anything really, from a television to running water. Imagine a fish, for example, being told about people getting running water in their home. They will probably think that it is ridiculous, people paying for that water when there is so much water there in the river they are in. That is sort of like the rich person, swimming in money, thinking it ridiculous that people actually pay to be able to have a little bit of money quickly.
Of course, just because people with little money can see the value of a payday loan, that does not mean that they want to pay a lot for it. Many of them will, therefore, support calls for interest rates to be capped or things of that nature. They do not want to have to pay a lot, nobody wants to pay any more than they have to for anything, that is only natural. It is a problem when laws are passed though because they can have unintended consequences. For example by capping interest rates it might mean that not all of the lenders can stay in business because they are not making enough money. That will decrease the supply of the loans available and this will make them more expensive. Of course if it cannot make them more expensive because the rates have been capped then the demand for the loans will probably keep going up but eventually the lenders will go out of business. By trying to control the price, therefore, it can happen that things can just disappear altogether. This has always been the problem with price control, the demand goes up but the supply does not so there are shortages. The problem is that most people do not equate the interest rate as being the price for the loan, which of course in reality it is.
You don't have to be very rich to think that fast payday loans are a bad thing, you just need to be rich enough to have never needed one. This applies to most people in the UK, the middle classes, and of course this describes most politicians. It is no surprise then really that there is a call from some politicians to do something about payday loans. As already mentioned, it is not as if the people who need them are going to be complaining about that either. As long as the government is not proposing banning them altogether then most people are going to support whatever measures are proposed because they are bound to be about bringing prices down. This could have unintended consequences as well though, as laid out above.
Also this does not take into account the picture from the payday lender's point of view. They want to provide this service and of course they want to make money. If they cannot make money from it then they are not going to do it. There is nothing wrong with that attitude either, if it is not possible to make money out of doing something then clearly it is not very valuable to many people. Perhaps it is valuable enough for a few people, but resources could probably be used in a different way that was valuable to even more people. When enough people find a particular service or good to be valuable then that will be a profitable enterprise and that means that it is improving people's quality of life.