Payday Loans Suck

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Image by vonglee via Flickr

A few weeks ago, I was approached about placing ads on this site.  I was excited when I read the email.  It came from a real domain, didn’t involve any Nigerian princes or wire transfers for overpayments.

Over the course of the email conversation, it was determined that, for a fee, I would place some links in a few archived posts.  It would just be links to improve search engine ranking, without being an eyesore for my current readers.  I don’t have a problem with that.  The intrusiveness is similar to Chitika ads, which are only visible to search traffic.  It’s a nice way to advertise: monetization without alienation.

Then I saw the links.  I was being offered money to promote payday loans.

Payday loans offer to loan you–for example–$100 for the low(snort) price of just $25.  That’s not bad.  Only 25%.  I know some credit cards that aren’t that good.  The catch is that the loan is due in full in 2 weeks.  That gives it an APR(Annual Percentage Rate) of 650%.  That’s not so good.

When you payback the loan, your paycheck is pre-spent by whatever you borrowed, plus the pound of flesh fee and you are that much more likely to need their services again, digging you even deeper.

It’s not like the target demographic is terribly affluent.  These are people who not only can’t make ends meet, but also can’t acquire traditional credit.  They are left paying this insulting fee.

I consider payday lending companies to be immoral, unethical and generally, more than a bit dishonest.  These are the people who give decent, hardworking capitalists a bad name.  I’d rather go to a mob loan shark.  He’s at least honest about what he is.

They got shot down.

Don’t get me wrong, I enjoy making money.  I also enjoy the money I make here.

But not at the expense of my soul or my integrity.

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  • 6 comments

    Comments

    1. I think Payday loans are one of the stupidest debts a person could ever take on.

      That said, I think the two ads on my right sidebar, “Cash Net USA” and “Better Trades”, are payday loan sites. I’ll sell ad space to almost anyone and mark it with BIG letters that say AD if I don’t think it’s already crystal clear.

      I figure that blog readers are used to sidebars being mostly ads and personal finance blog readers are probably the last people in the world that would get a payday loan.

      For example, I know that the friends I have that have used payday loans have NEVER read my blog (despite me pushing it like cocaine)…payday loans companies are being kind of silly if they think people interested in personal finance are their target audience.

      Of course, I may be wrong and a ton of people may have clicked through my site to a payday loan site…I doubt it though since my Adsense ads have gotten a total of 10 clicks in the 4 1/2 months I’ve been blogging…I think all of those were for Groupon, lol.

    2. I met a banker once in a training class. He enthusiastically told me “I love when people get into car accidents and break their jaws.” It’s actually the only thing I remember from that class.

      Why you ask? Because most people don’t have dental insurance that would cover such an event…and he was in the business of giving out medical loans. This was a big legitimate bank, but he shared the ways they get people to pay through the nose in interest.

      He said that something like 25% of people make late payments at least once. They actually counted on that happening in their business model so that they could jack people’s rates up. He also had other stats around how many people think they’ll pay off their loans during the low interest period and never do.

      Fascinating but disturbing. There are some professions that would be hard to justify entering into. Predatory lending is right up there.

    3. As a blogger who does let payday loan sites advertise on her site despite the fact that I think they are the dumbest loans anyone could ever take, I’m just going to quickly list why so nobody thinks I’m the devil:

      1) My readers are hopefully smart enough not to click on something that clearly says “AD” in bold above it.

      2) My Adsense ads don’t get many clicks (like six in 5 months) so I didn’t think any other ads would either.

      3) I like the extra money. Given #1 and #2, I actually don’t feel guilty and was surprised by this post (not in a bad way…I just hadn’t thought about it like this before). I still don’t feel guilty, but everyone obviously has their own lines in the sand. 🙂

    4. I couldn’t tell you what shows up on my google ads. Those are clearly ads. The advertiser I was talking to wanted to buy links, which are an explicit endorsement of their services, which bothers me.

    5. Oh, now I get you. I don’t like selling links in posts period. I do it for Mint.com on and off (but only link to their free services) and for guest posts that are marked as guest posts. I was referring to my link ads on my right sidebar that are marked as “CASH NET USA AD” and “BETTER TRADES AD”. 🙂

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