Look at real economic value of payday loan companies

Letters to the Editor (The Truro Daily News)
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Re: 'The rein needs to be tightened' editorial, Friday, Jan.25, Page 6; comment regarding payday loan companies:
With respect, the issue is hardly plain and forthright and your editorial shows the author still believes that people who use payday lenders are forced to do so.
The author has clearly not considered the difficulty that many people have in acquiring, or rebuilding credit, or the fact that most traditional lenders will not lend smaller amounts as it is not cost-effective for them to do so.
For those that actually need short-term financial help, or that need to rebuild their credit when banks have turned their backs, what are they to do?
The government - and the author - need to get beyond their clichÉd understanding of the payday loan business and look at the real economic value of the industry before resorting to the tired circle from which there is no escape - just the lines all over again, instead of realistically assessing the role of such businesses within the economic structure as a whole.
Michael Robinson
London, Ont.

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  • BJ
    January 18, 2010 - 09:50

    .
    Let's get the facts straight... Pay Day loan company transactions do not in any way affect credit scores. Credit inquiries are not done in the first place and thus reporting on payments etc. are not made either.

    And although it's not discussed in the letter.. fees, not interest is the primary cost of borrowing. Approximately $25 for each $100 borrowed is made mostly of these fees. Interest adds up to less than $5 of the cost.