If you have not had the misfortune of being in the position of needing a cash advance from one of these money-lending franchises, let me enlighten you.
For starters, the interest rate is 18%. It was over 20% just a few months ago. It was recently lowered. As I write this, I do not know the details of these changes, so I will put that aside until later.
18% Sounds high right? It’s worse than you think. That’s not 18% per year. That’s 18% due when you repay which is expected to be on your next pay check, which would typically be two to four weeks from the day to take out the money.
In fact, some people may only need the money for a few days to help them bridge a gap between when, for instance, their rent is due and their next paycheck arrives. That poor family still endures the 18% cost for the 4-5 days they borrowed the money.
So we’re not talking about 18% per year, which in the ‘real world’ of people who are fortunate enough to not be struggling, would be considered outrageously high. We’re talking about 18% in a month or less. And that family is very likely to have to take the money right back out again the very same day (same visit) that they repay the original loan.
So stop a second and realize what we just said. That family is already struggling.
And now they are stuck in an unforgiving loop. Someone sinking in quicksand does not negotiate with someone holding out a limb.