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In: Economics

Describe the two (opposing) explanations of the cause of consumer use of PayDay loans, and the...

Describe the two (opposing) explanations of the cause of consumer use of PayDay loans, and the implications of

these theories for policy design.

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Access to Financing: PayDay loans are one form of financing that consumers can use when they...
Access to Financing: PayDay loans are one form of financing that consumers can use when they have insufficent cash to pay bills. Borrowers often can't access other methods of financing, because of a poor credit score (credit card) or lack of homeownership (home equity loans). States often have laws to limit the amount that PayDay lenders can charge for these short-term loans. For example, the state of Alabama has a law that limits the finance charge or interest rate to...
Access to Financing: PayDay loans are one form of financing that consumers can use when they...
Access to Financing: PayDay loans are one form of financing that consumers can use when they have insufficent cash to pay bills. Borrowers often can't access other methods of financing, because of a poor credit score (credit card) or lack of homeownership (home equity loans). States often have laws to limit the amount that PayDay lenders can charge for these short-term loans. For example, the state of Alabama has a law that limits the finance charge or interest rate to...
Payday Loans.  As you saw, the interest rates on these loans can be extremely high and are...
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Payday loans are high-interest short-term loans, usually over a period of two weeks. One recurring political question is whether or not interest rates on such loans should be capped. Roughly speaking, those in favor of caps want to protect consumers from potentially harmful loans, while those against caps want to let the free market determine what the rate should be. First, do you think there should be interest rate caps on payday loans or not? Defend your answer. Also, determine...
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Payday loans (Links to an external site.), a cash advance on a person’s paycheck, are a form of credit that only require income and a bank account. The borrower typically agrees to pay a fee, which acts like an interest rate, to the lender and is required to repay the loan at the time of his or her next paycheck. Recently, the government and private companies have added to the debate over payday loans.Part 1: The typical payday loan comes...
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1. Payday loans are one of the most insidious business practices, and their customers seem to end up with a payday ball and chain around their neck that never seems to go away. This is because the interest and fees associated with these loans are so high that many people get trapped into taking one after the other over and over again. Rarely do payday loans end up being the short-term solution they claim. On the business front, there are...
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