Brian Jarvis’ Nov. 27 column (“We don’t need another payday loan business in Columbia”) ignored the value of short-term “payday” loans in helping customers meet urgent, unexpected expenses.
Short-term loan customers appreciate having access to credit that saves them money by helping them to avoid fees associated with bounced checks and late bill payments, which can carry APRs of up to 3,500%, according to a FDIC analysis.
In addition to being more expensive, these options negatively impact credit ratings and may hurt a consumer’s access to employment, housing, insurance and other credit options.
So, payday loan borrowers are often making reasonable choices to proactively manage their finances in the face of more onerous circumstances.
In fact, the vast majority of short-term borrowers fully understands and accepts the associated fees, and uses the product as it was intended – a short-term solution to urgent, unexpected financial needs.
For the small minority who has difficulty meeting their loan obligations, responsible lenders offer extended payment plans that change the time they have to pay off the loan from two weeks to two months. These plans eliminate the need for customers to renew their loans.
Reasonable, hard-working Columbia consumers should have access to the widest range of regulated credit options, and we should trust them to make financial decisions based on what’s best for them and their families.
Tom Linafelt is the director of corporate communications for QC Holdings in Overland Park, Kan.