by Joanna
I am sure everyone has seen advertisements for "pay day loans". They are advertised as being available to anyone who has a bank account and a source of income, regardless of credit. They are touted as the solution for making ends meet when you come up just a little bit short on paying your bills.
Of course, those ads never mention that pay day loan companies KNOW that they can prey on the poor and get them caught up in a never ending cycle, in which they are forced to take out loan after loan at exorbitant interest rates.
Pay day loan companies often specifically target the elderly and disabled, individuals who rely on Social Security benefits. These loan companies know that this is a very lucrative market for their loans. After all, an individual on Social Security has a guaranteed source of income, so the loan company knows they will be able to receive some sort of payment. AND, the income of people on social security is low enough that they are often forced to take out multiple loans, one after another.
But some industry critics say fixed-income borrowers are not only more reliable, they are also more lucrative. Often elderly or disabled, they are typically dependent on smaller fixed incomes and are rarely able to pay off their loans quickly. "It's not like they can work more hours," says David Rothstein, an analyst at Policy Matters Ohio, an economic research group in Cleveland. "They're trapped."Source
Same pay day loan companies convince the elderly and disabled people who take out a loan to turn over their social security benefits to the company, and then provide them with a small allowance from each check. They specifically target individuals who are under educated, elderly, perhaps confused, and convince them that a small loan is the solution to their problems.
