Payday loans have always offered easy, fast credit to those with poor credit ratings, and have formed an often needed stopgap for people who find themselves with an emergency which requires a little cash that they don’t happen to have on hand. There’s nothing wrong with that. Given the right situation, these kinds of loans can be lifesavers.
But in what just might be the ultimate exercise in stupidity, many payday loans places are now offering their small, short term, high interest loans to people who don’t have jobs. Maybe it’s because, in our present economic situation, the pool of employed people to lend to has just become too small to be profitable. But giving a payday loan to a guy on unemployment? Come on, that goes beyond kicking a guy while he’s down.
Unfortunately, the unemployed are among those most likely to have a sudden need for cash. And they’re certainly amongst the most likely people to lack on hand funds. But taking out payday loans when there’s no payday in sight only makes the problem bigger.
We know, unemployed people do get an unemployment check. In most places, the unemployed can collect benefits for up to two years as long as they’re making some effort to look for a job. But the system that governs that whole mess can be volatile. Congress votes (or fails to vote) and wham! Benefits are gone. For a guy who has an outstanding balance on a payday loan, that means making the choice of giving up most of the last check he’s going to see until the Republicans and Democrats get together and decide to pay him or reneging on the loan. Neither one presents a pretty picture.
Payday loans have their place. But that place is for those who have a regular paycheck coming in. If you’re in the situation where you can’t count on the next paycheck, don’t take out a payday loan. In the end, you’re only hurting yourself if you do.
We remember being in this exact situation. We needed money, but we were unemployed. A good friend gave us excellent advice. When asked, “What are we going to do if we don’t take out a payday loan?” he asked us in return, “What would you do if payday loans weren’t available? Whatever it is, do that.”