Millions of people suffer from payday loan debt every day, even during the pandemic. The New Yorker recently did a piece on a typical woman who utilized these loans and has found it incredibly difficult to maintain.
Her name is Azlinah Tambu, and she is a 22-year-old single mother living in Oakland, California.
Finding herself in a challenging situation, Tambu had to take five payday loans from five different lenders to fix her car. This is a typical story that occurs to many people in the country, which many legislators are worried about.
Tight Spot with Payday Loan Debt
Tambu was in a tight spot because she needed her car fixed to get to work and drop off her child at the daycare. She knew there would be many difficulties in paying off the payday loans. She needed her actual paycheck to pay for rent and utilities. Unfortunately, she was not anticipating the type of trouble she would have with these lenders.
There is no legal “rollover” in California where a lender can refinance loans. Tambu had to pay back the first loans, but she then needed to borrow more money from the same lenders and incur even more fees. Lenders tried to withdraw money from her checking account. But she had almost nothing that they could take. When they tried, she overdraft and was charged over $300 in overdraft fees.
The account fees were quickly paid, and she closed the bank account. She is still struggling to pay off the lenders that helped her with the car.
This is what people in the industry are doing because they gain so much from them. It is important to remember that the people who are struggling with these loans are not only being taken advantage of in certain situations, but they also have their lives completely ruined.
For a single mother taking care of a child at the age of 22, it is arguably exploitation to have payday loans with outrageous fees. Although $15 is not really all that expensive for every $100 borrowed, it can still add up to a lot with 15% interest every few weeks.
Tambu’s Aftermath
Unfortunately, the story for Tambu has not gotten any better. She visits all 5 payday lenders to provide approximately $40 to each in order. When asked whether they should be illegal, she quickly responded that they should not. In fact, she is working so hard to pay them off to utilize them later on if needed.
At the end of the day, people need to borrow money even if it is not in their best interest. But you have to make sure you can pay these back quickly. Lenders are there to collect interest, not to have these loans paid back too soon.
