LETTER: Payday Loans Make Financial Sense
Instituting an interest rate cap would eliminate a valuable service to those who need quick credit.
I work for Advance America, a payday lender here in Rhode Island. There is a lot of misinformation about payday loans, but here’s the reality: Every day I help fellow hardworking Rhode Islanders – teachers, first responders, small business owners – meet their financial obligations and support their families. They visit my company for simple, affordable and reliable credit.
A payday loan can make personal and economic sense, especially when compared with unregulated Internet loans, overdraft fees and penalties for missing payments. For every $100 borrowed, our customers pay a flat $10 fee that does not compound interest – whether a customer repays their loan in three days or 30, they pay the same one-time fee. My coworkers and I help customers borrow and repay successfully. And they do – more than 95 percent repay their loans and say they are satisfied with our services.
Instituting a 36 percent rate cap, as some legislators have suggested, would spell the end of this valuable service – by squeezing our fee to pennies per day – without doing anything to address the need for credit in our state or ease the challenges people face. And my job and 80 others are on the line.
Every day, I see the stress on customers’ faces when they enter our center, and their relief when they leave. I am proud to offer my fellow Rhode Island residents a dependable and cost-competitive credit solution when other financial institutions do not fully meet their needs.
The General Assembly should keep short-term credit accessible in Rhode Island.