You are here

Payday Loans - A tale of two borrowers

niallrice_z5511evw's picture

Fred Bowers and Catherine Smith were two customers at their local payday loans office that went in on the same day to take a loan when the going got tough. Though they both got roughly similar amounts of loans at the beginning - Fred borrowed $300 while Catherine borrowed $350 - their experiences were remarkably different.

Fred Bowers was a 34 year old married father of two and worked at a local sheet metal fabrication plant. He had been working there for a long time and was well-known member of his local community. About nine months ago, was unwell and had to stay at home for almost three weeks, using up his annual allocation of "sick off" days and having to take a week of unpaid leave. He therefore decided to visit a local payday loan company and requested a quick loan to tide him over for the time that he had been off work as the bills had been piling up. Fred explained his need to the loan officer, completed a quick form and left the payday loan office $300 richer, promising to repay $337 within the next three weeks. The loan helped and Fred was able to get back to work and continue to meet his family obligations. He dutifully set aside $112 each week to repay the loan.

Catherine Smith was an unmarried mother of one working as a receptionist at the same sheet metal fabrication plant that Fred worked at. Despite having a relatively well-paying position, Catherine had always had problem making ends meet every month. About nine months ago Catherine had not paid her car insurance and she had heard of a local payday loans place where she could borrow the money required - $200. So she went in to take the loan. While there she completed the same form that Fred had completed and was pleased to find that due to her pay grade she actually qualified take an initial loan of $350 and she quickly crossed out the $200 she had filled in as "loan required" and replaced it with $350 and she too left with the money in her purse.

After three weeks, Fred had saved up the money to make his loan repayment and he did so in one easy payment.

At the end of the month Catherine went in to see if she could stagger her loan repayment. She was informed that the easiest way to solve her problem was to take another loan of $400, make a payment of the interest on her last loan ($43) and then continue repaying both loans at the minimum rate of $120 per month until all the loans and interest were paid off. Again she left the office $357 richer but this time with two payday loans totalling $750 and substantial more interest payments to make.

Story sent in by Soleil Nuchurch

User login