I am a responsible user of payday loans. I use them typically 3-4 times per year. They save me money on late fees I would otherwise pay. I have a credit card, but if I can not pay it on time, the late fees can be greater than my loan balance. So despite a low stated interest rate, it can be more expensive for me than taking a payday loan.
I also do not understand why you view pawn lending as favorable, the cost is about the same, only it is secured with an asset. Only pawn something you are willing to sell at a cheap price.
juanof CA4:42PM June 08, 2010
Renting is actually a practical option that can make sense for some people. I work @ Rent-A-Center and know that small weekly payments can make things affordable. It enables customers who may be turned away by other stores because they don’t fit a certain credit profile or have a lot of $$ on hand to get things when they need it. (If your fridge, washer or dryer breaks, you need something now.) At the same time, more of our customers who rent-to-own from us may start off using the smallest payments but end up using our 90 day same as cash payout options that make prices comparable to retail. (In fact, on the larger business/company side, our net profit margins end up being very similar to retail.) Other customers may use us as a quick fix to get thru a tough time– if their fridge breaks down, we’ll deliver one to them for $16 a week. If they find a used fridge from a family member or garage sale somewhere a few weeks later, they can return the rented fridge to us and we’ll pick it up, no extra charge. If that used fridge breaks a few months down the road, they can re-rent our fridge & pick up payments where they left off without losing what they paid in. Being able to stop renting and pick it back up in the future works for people whose circumstances may change, too. If someone’s laid off, they can stop renting the merchandise and once employed again, they can pick up payments where they left off. Yes, in a perfect world, of course it’s great to save ahead so that you’re ready for anything that may happen, but it’s not a perfect world and sometimes, life just happens. There are definitely benefits to using rent-to-own that can help make life manageable for people. When times get tough, good info about what options are available and how those options work is what helps people make good decisions that make the most sense for them.
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juan of CA 4:42PM June 08, 2010
Elise of TX 11:31AM June 08, 2010