Payday lending remains a highly controversial subject. The debate about its merits of is polarized. Proponents focus solely on the payday loan as the only source of helpful credit to a segment of consumers excluded from mainstream lenders. Opponents focus solely on the adverse consequences so many customers experience after using payday lenders. Neither side acknowledges arguments, however legitimate, the other makes. Demand for small-amount, short-term loans is undeniable. Absent from most discussions of the subject is an exhaustive comparison and analysis of the myriad of rationales industry attackers and defenders use to justify their positions and conclusions. A deconstruction of the arguments leads to the inescapable conclusion that the justifications for payday lending are not supported by the evidence. Thus, even if consumers have no other alternatives, payday lending is not the answer because any benefits from its use do not outweigh detriments. But neither steering certain credit seekers to mainstream markets that either ignore or exploit them or resignedly accepting a predatory lending system serves those with credit impairments well. The solution to this conundrum lies in a concerted effort by state and federal governments, nonprofits, responsible corporations, faith-based groups, and philanthropic organizations together to develop an alternative and sustainable financial system for those for whom traditional credit is unattainable or undesirable without the exploitation that characterizes payday lending.
Available at: http://works.bepress.com/ron_elwood/1/