Payday Lenders Vs. Lenders Essay
Current Payday Loan Business Model that Lenders Are Defending in the Face of Federal Clampdown
Most payday lenders have a very simple business model. Borrowers must show proof of steady income and have a checking account. Based on this information, lenders agree to give the borrower cash, and borrowers agree to give the lender a postdated check for the full amount of the loan plus the lender 's fees. For online payday loans, borrowers typically authorize the lender to make an electronic withdrawal of funds from their bank accounts on the due date of the loan. If borrowers are unable to repay the loan when it is due, they can typically renew the loan by paying just the fees.
The current business model is straightforward and simple to administer. Employees who assist customers and who approve the loans…