It would be nice if people weren't running so close to the edge that an emergency can ruin them. I don't know the particulars of this guy's story, there must be many people who are in this situation since this is such a profitable industry. Maybe that speaks to a larger issue of inequality in our society. I'm not sure that relying on predatory loans to be a safety net are the only or best option for society.
As for societal conditions, almost everyone needs loans for something at some point, but taking out a small-time loan at a high interest rate is almost always a terrible option. Usually when there is a terrible option on the table with other less-terrible options, people don't choose the terrible one unless they really have to (or have absolutely no clue what they are doing). A rich person buying a BMW isn't going to take out a 300% loan on the car because they have other options and it's a literal waste of money for them. However, a poor person who's 1998 Toyota Camry broke down and needs to get the most bare-minimum used car to keep their only job has to suck it up and pay the 300% loan because they have no other options. By the time it's all said and done, the poor person paid a lot more relative to the cost of the item they bought even though the total amount may be less.
I come from a "payday-loan poor" family, and spent a good chunk of my adult life there myself. It's hard, but people with comfy salaries paternalistically taking options away because they know better really agitates me.
High interest-rate loans are one thing. Forcing payment for the company's lawyer is another. Broad-spectrum mailing of loan offers with (what looks like) no assessment of ability to pay is quite another still.[1]
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[1] Or even worse, selecting for people who they know can't pay immediately, so they can rack up the margins/fees. That would be one of the typical definitions of "predatory."
There aren't obvious better options, once you strip the business down to its core of high-risk credit. It's a business that no matter how efficient is going to come with high interest rates.
The obviously predatory marketing practices need to be stopped. But the core of the business here is never going to be a nice one. :/
Absolutely, I just think it's a shame that there aren't alternatives available. Normally I'd assume that interest rates are that high because that's what is required to remain profitable while lending to the market, but I can't help wonder if consolidation and wall street ownership means there's a large profit margin and some gouging happening.
I don't want him to need the loan, but I respect him enough to trust him with the option. I'd prefer a competitive marketplace for his loans to shaming the concept of an alternative financial system, and I absolutely would not put it past capital to collude to keep the interest rates high.
I don't know that, though, since these are risky loans. Case in point, this very dude didn't pay it back.
As others point out, payday loans and similar service a need. Payday loans in particular are the low-class version of it. The businesses go by different names higher up the class ladder.
He ended up loosing his job and could not make any of the payments. They lost their house, cars, and got divorced shortly after.
However, they are still in a different situation than the people that get sucked into those terrible high interest loans. He could literally get a new job as his educated and be back to making over $100k. A person that does not have any skills or education will have a much harder time trying to bounce back. As everything is more expensive when you are making minimum wage.
1: https://www.cnbc.com/2018/01/18/few-americans-have-enough-sa...
2: https://www.cnbc.com/amp/2018/05/22/fed-survey-40-percent-of...