Why Choose Payday Loans?
“We believe consumers are rational,” said study co-author Tom Lehman, associate professor of economics at Indiana Wesleyan University . People have “good reasons” for choosing payday lenders, finding them at times an “appealing option,” he said. The typical payday borrower has a bank account and a job, Lehman, citing the report. Over 50 percent make between $25,000 and $50,000 a year, and over half are married. Ninety-four percent have at least a high school education, he added. More research is needed on how borrowers are distributed by race and gender, he said. Most consumers know the cost of a payday loan before they borrow, Lehman asserted. Most borrowers do not think in terms of annualized percentage rate, because payday loans are generally for a two- to four-week term, but consumers do understand flat fees, he said. A consumer may prefer to pay a flat fee of $15-$20 per $100 borrowed, rather than a $20-$60 phone reconnection fee due to missed payments, or overdraft charges on bou
