Borrowers without alternatives fall prey to predatory lenders


EL PASO, Texas — Payday lending seems to be the only recourse for many people with no credit or damaged credit needing financial assistance in this rough economy.

Many people find it hard to pay all their bills when their work hours are cut and they find themselves without cash. They have to turn to payday lenders.

Payday lending the only recourse for many in this rough economy. (©iStockPhoto/PeskyMonkey)

Payday lending, the only recourse for many in this rough economy. (©iStockPhoto/PeskyMonkey)

People with good credit normally just go to the local bank and ask for a routine signature loan. However, even for them, getting a loan is not easy anymore. Even people with good credit are being forced to find alternate financial options. These people are also turning into payday loan’s new customers.

There are over 20 places you can visit in the city of El Paso to obtain payday loans. They are most prevalent at pawnshops. Almost every pawnshop is affiliated with a payday loan service.

“You look in the phone book and there are so many places to get a loan in El Paso —you’d think they were giving money away,” said Rosa Acavedo, a patron of a local payday loan facility.

Traveling this border city, one notices that most pawnshops and payday loan places are indeed located in the city’s poorer areas. They are looking to target low income people. Alameda Ave., in the lower valley area of El Paso, has over five payday loan stores in just under a one-mile radius.

Payday loans trap unprepared people in a vicious cycle.  They think they are getting help, when in fact they are getting more into debt because they fail to lower their loan balance.

“I’ve had this loan over a year, and I just pay the interest. I don’t have the money to pay it off in full. I must have already paid the amount of the loan off three times already,” said payday-loan customer Roger Fernandez.

What Fernandez says happens all the time. You could break it down and see the terms on the contract but most people are hurting for money and don’t bother to read the fine print that allows the payday lender to charge interest rates as high as 300 percent.

A common example of the payday loan trap is that you can borrow a term loan of  $100 from a payday advance and have to pay $25 each payday. If you don’t pay any more than that you still carry the original balance and could continue paying it for months, maybe even years in some cases. In just four paydays the fees can amount to what you borrowed and yet you still owe the original amount!

Payday loans have had some constraints imposed on them in the past couple of years. The government has made it illegal for them to lend to soldiers. But if the government can protect its military, why can’t it protect regular citizens by placing stricter regulation on these places?

“If someone were able to regulate these places, I think It’d be able to pay off faster with lower interest rates. But until that day, I’m stuck relying on this place and making it more wealthy,” said Monica Salas another payday loan customer.

Until the economy picks up or until the government begins to impose stricter regulations on these businesses, payday-loan places will continue to make an easy buck off those least able to pay.

3 thoughts on “Borrowers without alternatives fall prey to predatory lenders

  1. I am always very surprised to see such heartbreaking stories that are so misguided. A payday loan is a high-risk two-week loan with an average fee of $15-$17 per $100 borrowed, so it’s not correct to apply annual rates to such loans. Payday lenders will not be able to provide their services to those who are in need of short-term credit if their fees are significantly capped. A proof of that is a non-profit tax-exempt Goodwill that charges almost the same amount for their ‘good money’ loan only to break even. Payday lenders are already closing in the states that have capped their interest rates, and customers have nowhere to go. Banks, especially big ones, do not offer small dollar loans, because they do not want to charge small percent on such high-risk loans. Not everyone has access to credit unions which do charge somewhat smaller rates, although not necessarily. At the end of the day, do consumer rights activists really care about consumers when they try to eliminate their financial options? I’m not sure.

  2. I just really don’t get it. Eddie will you ban my credit card company from charging me $40 for being over when the first $40 late fee penalty was what put me over in the first place because they don’t process your payment when they say they will? Also, will you ask the traditional banks to start handing out small loans to us that need it when you ban payday loans? I’ll continue going to sites like and I feel as if that’s our right! Nobody should be able to make the decision for us on whether or not we need to borrow money, and yes that’s a high APR, but when it’s to be paid back in 2-4 weeks how in the world can someone consider it APR anyway?

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