Californians deserve a balanced payday loans argument

The California State Capitol Building in Sacramento, photographed during the daytime.

Are California legislators getting the whole story on payday loans? (Photo Credit: CC BY/Clinton Steeds/Flickr)

As mainstream media is quick to assert, the APR charged for California payday loans is typically somewhere between 300 and 400 percent. If San Diego installment loans were actually 12-month loans, those figures would indeed be frightening when compared with traditional bank and credit union loans. However, some California personal loan customers don’t have the option to pursue such “traditional” forms of credit because of their personal financial situation. Thus, the argument used by the media is that short term loans are too expensive is far too simplistic.

This fails to present a balanced San Diego installment loans argument

Yes, there are stories like the recent California payday loans with no checking account piece by Mike Cassidy of the Silicon Valley Mercury News. Sarah Portales, an employed 51-year-old single mother, claims she is trapped in what appears to be an endless cycle of debt from which she cannot escape. Portales tells Cassidy that she fully supports proposed legislation in the California Senate that would reign in San Diego payday loans, if not eradicate them entirely.

But what of those who have no other options and need cash immediately? It can happen. Auto repairs and family medical bills can strike at the worst possible time. In those situations, paying $15 to $30 for each $100 borrowed seems like a relative bargain, compared with losing work and good health.

How did Sarah Portales use California short term loans?

The Mercury News makes vague references to paying bills, without identifying the situations in which Portales used cash advances. Without that information, it is impossible to make a convincing case that she is a victim. Perhaps she made errant decisions. Cassidy does not make this clear, but his bias is overwhelmingly clear. After building a shaky case in several different ways to claim that any California or San Diego payday loan is a financial quagmire, he only uses one supporting quote to make the case for the payday lending industry. A note that the California State payday loan regulatory board attempts to work with cities like San Diego in a “friendly manner” leaves the door open for many questions that Cassidy doesn’t even attempt to answer, such is his fascination with drowning out well-documented studies regarding the installment loans industry.


Silicon Valley Mercury News

A more balanced payday loans argument