The Ever-Increasing Payday Loan Dose

Type “cash advance” and click “Google Search”

A few days ago I got a $250 payday loan. Read I Saved Money with a Payday Loan and Payday Loan Payback. I didn’t like getting a payday loan, but I liked the alternatives even less. I don’t use credit cards and except for my car loan, I’d never had installment loans of any sort.

But one day I was stressed about paying my bills.  I wasn’t even thinking of a payday loan when I sort of absent-mindedly typed “cash advance” in my search bar.  Then I clicked on “Google Search” and I discovered a whole new world.

Just say “no” to successive loans.

The world of payday loans is not a place I want to visit regularly or often. I didn’t have to read very far before I realized that payday loans are the subject of strenuous, nationwide debate. I’m not too interested in the details — because I got what I wanted from a payday loan and I got right out — but my impression is that the problems stem from successive loans. And I can assure you that uninterrupted service is exactly what payday companies want to provide.

The minute I applied for a payday loan, I received an onslaught of emails from competitor companies offering me more loans. I also received emails from the company I used telling me that I could get bigger and less expensive loans if I kept getting more of them. At some point, after four or so payday loans, I would qualify for an installment loan.

Don’t get mired in the habit.

It is beyond dispute that payday loan companies are motivated to get borrowers securely mired in the payday-loan habit. A few days before my next payday at work, when my loan was scheduled to be paid by an automatic deduction from my checking account, I started getting emails from my lender telling me that I could get another payday loan “the moment” that my first one was paid.  All I needed to do was “log in and click the Apply Now button.”  My supplier was at the ready — I wouldn’t even have to dry out between doses.

I understand how people could get trapped in this stubborn payday-loan cycle. But what I don’t understand is why they would get the first payday loan unless they were certain they could pay it back without getting even farther behind. In other words, I don’t understand why people would make their situations worse by getting loans they know they can’t pay back and that will cause them to need ever-increasing doses.

Let them fight their own battle.

I don’t know what the solution is for people who need money but cannot solve their problems with a single online cash advance. Perhaps they would be better served by a debt-relief program or bankruptcy. And no doubt the proper comeuppance for payday loan companies who knowingly dole out these ever-increasing doses is borrowers who can’t repay their debts and borrowers who discharge them in bankruptcy.  Obviously, given the payday loan companies’ immoderate finance charges, these are premeditated losses.

Make sure you know exactly how you’re going to get out.

I’m not saying I wouldn’t do it again. I would. I was happy to get that payday loan, but I was even happier to pay it back. If someone takes the first payday-loan dose without figuring out whether it will lead to an increased dose, I say the risks they take are fair play.  But if payday loan companies encourage these addictions – and I now know for certain that they do – and then can’t collect from their borrowers, I say that’s fair play, too.