People don’t need financial choice removed
Myrtle Beach Sun News
April 8, 2009
by: Craig Conwell
An editorial [Dec. 23] suggested that the "unraveling" of the economy is a good time for the legislature to "rein in" the payday lending industry.
The writer of the editorial does not understand economic hardships the way I understand them. I have lived them. I do not view hard times as a good time to deny folks one financial option they might need.
I am a 42-year-old man who grew up in Conway, got a college degree from S.C. State and started numerous small businesses. I have scrapped and scraped and generally worked my rear end off to realize the American dream of entrepreneurship. In the process, I am building a good life for my family and hopefully have given back to the community at least as much as I received.
But there have been times when I did not know if I would make it. And I would not have made it without the sole institution that was willing to work with me on small loans over a short period of time, and that is the payday lending industry.
Like most everyone, some times in my life have been better than others. But there were two times in my adult life, in 2000 and 2004, when my back was against the wall. I had bills to pay and mouths to feed. Most people will recognize this as a cash flow problem, and a lot of folks have that problem nowadays.
Banks and other lending institutions simply were not interested in helping me meet immediate financial needs with small loans. I could probably have gotten a loan for an expensive car to be paid out over four or five years. Based upon what we now know about the banking industry, I probably could have gotten a huge loan to buy a house regardless of my ability to afford it. But I did not need that kind of help. I needed relatively small amounts of money to meet immediate needs.
A payday company was the only place willing to help. I was required to show proof that I had a job and bank account. It was explained that I would pay a flat $15 for every hundred dollars I borrowed. The terms were clear, and I signed up. No one encouraged me to borrow more than I could afford, and they worked with me a couple of times when my payments were late.
The $15 fee per hundred dollars was a lot less than what the bank would have charged for a bounced check, which was my next option without payday loans. Which is why I found the newspaper editorial so puzzling. The paper suggested that South Carolina follow the route of Georgia and North Carolina in regulating the industry. What the editorial did not say is that actions by the legislatures banned payday lending in those states. The industry does not exist.
A study last year determined that consumers in those two states experienced more bankruptcies and credit problems as a result, and concluded that consumers are worse off because of the ban.
Is that what we want for South Carolina, which has the third-highest unemployment rate in the country? If so, then answer this: What will take the place of payday loans? As I found out the hard way, there is not an affordable alternative.
It is easy for politicians and newspaper editors to criticize and denounce. But that doesn't help me or my people at all.
I am sure there are some payday lenders who are not honest. And I know there are consumers who foolishly borrow more than they can pay back. But it's not just a payday lending problem. After all, the banks - not payday lenders - are in an economic free fall because they encouraged people to borrow more than they could afford, and I don't see any outrage in the legislature over that.
Times are tough. Those of us in the real world need more financial options, not fewer.
