Ethnic background has no part in a cash advance loan

There are says that cash advance lenders purposefully exploit minorities. The idea is that short term installment loan lenders go places to exploit impoverished minorities. Well, there is something about that idea that is common to claims like that about practically anything. The truth isn’t that simple. Desire determines exactly where a cash advance store goes, not race. A business which doesn’t follow simple demand is a hard one to discover.

Groups of cash advance stores could be found

One of the allegations made about payday lending is that loan companies will move into specific areas in order to target customers based on race. A record had been released from the Center for Responsible lending. This showed that in California, areas that had mostly African Americans and Latinos in them had more payday loan companies than other areas. Check cashing is available in most of these areas. They’re just places financial services tend to be available. A study was done in 2009 by Robin Prager that showed that areas that had a population mostly under 40, had been urban and rural, and lived around the poverty level were the typical areas payday lenders would set up shop. Lending to those who can’t afford to pay back the loan is a bad business strategy. That’s why payday loan companies don’t do that.

Area of supply is determined by the desire

Payday loan providers move where desire for the service is. Arguing that it’s predatory due to the demographics of the area doesn’t make very much sense. Marketing to a specific group rather than everyone would always be considered predatory is that is the definition. This could be compared to a company who offers heavy coats to those in Anchorage where it gets below 80 degrees but does not offer those very same coats to those in Arizona. That would be predatory too if targeting minors like this is considered predatory.

This is shown with economics

Correlations don’t necessarily end in cause and effect relationships. That makes sense. Also, payday loan providers would be out of business fairly fast if everyone they lent to could not afford to pay them back at the end of the term. The businesses would all die off fast if this were the case. You can read more in the payday lending facts and statistics report on Personal Money Store.