The Reality Behind the Predatory Economy

• Research done by various groups over the last couple of years has estimated that 49% to 79% of Americans are living paycheck-to-paycheck.
• It is also fair to assume that for many, there are more bills and other expenses that outweigh their income.
• The ugly truth is that those who are financially struggling pay to be in the struggle.

Research done by various groups over the last couple of years has estimated that 49% to 79% of Americans are living paycheck-to-paycheck. With such high numbers, it is also fair to assume that for many, there are more bills and other expenses that outweigh their income. When this happens, it often leads to forcing a person to seek assistance and borrow money. While some people may be able to go to friends and family, not everyone has those options. Instead, it leads to relying on the predatory economy, including payday lenders, title loan services, and pawn shops. 

Services within the predatory economy are often referred to as “wolves in sheep’s clothing.” Why? Many people describe them as services that mask themselves as blessings when all they really do is take advantage of those financially left between a rock and a hard place. The predatory economy traps you in an almost inescapable cycle of debt through ridiculous fees and sky-high interest rates. 

The fact of the matter is over 12 million Americans use payday lenders each year, and a third of those people are millennials. This issue is that even when it seems to be the only option left, many people are still uninformed on what they are getting themselves into. 

Below are some interesting facts and statistics regarding payday loans/lenders. 

1. An average payday loan claims a third of a borrower’s next paycheck. 

2. Most borrowers owe payday lenders for five months out of the year and typically end up paying $800 for a $300 loan.

3. The rates charged on payday loans can be up to 35 times those charged on credit card loans and 80 times the rates charged on home mortgages and auto loans.

4. Interest rates can be as high as 800% APR. 

The ugly truth is that those who are financially struggling pay to be in the struggle. A change has to come.