Can I just take the time right now to gush over the hilarity and genius that is John Oliver? Last Week Tonight is just an absolute stroke of genius by HBO and it's just brilliant as far as political satire goes.
(Although I already miss the clever Brit on The Daily Show, I have come to terms that he's simply gone the way of Stephen Colbert and Steve Carrell).
One of the best things on the show is how he addresses everyday issues that's making news and not only does he provide real in-depth context and background to the issue at hand, he then breaks down how the government and politicians is mucking it up.
One such problem that he beautifully illustrates was actually about Payday loans or as he called it, "the recycling centre of human misery."
Full disclosure here: I have never used a payday loan, never seriously considered it an option in my life and have never even walked into one of their stores, even to use their toilet. I have toyed with the curiosity of what kind of business practice they run, but common sense eventually prevails to stops me from being that, for lack of a better word, stupid.
Even at my most desperate, I always saw the option of payday loans as one of those things that felt a little "too good to be true." I mean, they give you a couple hundred dollars, "no questions asked" that you pay at your next paycheck and "only" $20 in borrower's fees for the short-term loan which ought to be more than covered by that paycheck supposedly.
Sounds like a sweet deal right?
Well actually... $20 on say a $200 short-term loan is quite a lot. Basically you're paying them 10% of what you borrowed from them, and for what? Money you were going to earn eventually, so all you're really paying for is time.
Is getting a paycheck 14 days or less early really worth throwing away $20 of hard-earned work to you?
My answer: Nah. If I don't have the money, then I don't get to spend. And plus, I'd rather keep my $20 and wait the however many days left until my next paycheck because the work to make that money is worth more to me than the borrowed cash I can spend in the meantime.
Now some people may argue the reason is simply because I never 'had' to take out one of those loans, I never had bills and other things to pay or dependants that have needs when I had no money (Um... no, I've been there). And with that responsibility and lacking the cash on me to afford it, I would be 'forced' to have to take out a short-term, unsecured loan to bridge the gap for my own or my dependant's sake, right?
No denial, there are people out there that may "need" these loans. But given that most people that ends up "needing" them then has to sell possessions or borrow money from friends and family to pay off the short-term loan when it's all said and done with, it begs the question why those other options weren't available when they took out the loan in the first place? And they'd likely have lost considerably less money to stupidity in the process.
So remember how I said that these payday loans always seemed too good to be true to me and is what made me steer clear of them as a viable option to debt or other things? Well, it is too good to be true.
Consider credit card debt. And consider how debilitating that debt is at an annual interest rate of 19% interest. Now imagine that annual rate is not 19%, but 28%? How about 400%? Or 4000%?
Sounds barely legal, right?
Well first of all, that kind of marked up interest return in place by payday loan stores isn't legal in Ontario or really Canada as a whole. Ontario actually caps the interest at 21% of the amount borrowed while federally, the maxed allowed annual interest rate is 60% before it is considered criminal.
Do they abide by those rules in place or are they like their American cousins, finding loopholes to circumvent these laws? I'm sure they'd deny it, but politicians also deny all the time when they're exploiting loopholes as well.
And anyway, I wouldn't know for sure if laws are being circumvented anyway, because I've never used one. And I'm not about to find out either.
So in a jam and considering a payday loan? As Mr. John Oliver and Sarah Silverman so clearly lays out in the above video, ANYTHING ELSE is preferable than taking out a payday loan. Especially since once you start taking out payday loans, it's like the song that never ends. You get stuck in a miserable cycle in which you keep having to borrow a payday loan in order to afford the loans PLUS interest and living expenses that they took from you in the first place.
And that's just it with payday loans. The practice itself preys on the most vulnerable of our society, people who will get caught in the vicious cycle because they have neither the understanding or the ability to get out of it. And they encourage people to get sucked into the trap because what makes payday loans profitable is repeat customers.
But once in it, all it'll take is one giant accident for the whole thing to go from a cycle to an out of control spiral.
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