| Criticisms from a variety of sources are regularly thrown at the payday lending industry, but unavoidably these criticisms tend to point back toward a single source: usury. Lending and also the charging of interest - such as the idea of "exorbitant or unlawful interest rate," as a Google find describes usury - probably predate the creation of the Judeo-Christian Bible and similar monotheistic world religious books. And it is within such books that the most loyal enemies of payday lending uncover their reason for equating payday loans with usury. But you will find that connecting payday lending and usury is both unreasonable and exorbitant in and of itself, as you carefully examine both the secular (dictionary) definition of usury and also the religious interpretation it will show. Knowing your history: Payday lending and usury Although some Judeo-Christian scriptures, like that of Exodus 22:25, Ezekiel 22:16-31, Ezekiel 18:8-17, articulate toward a ban on usury and charging interest, there are many other scriptures that make the distinction that "Hebrews were permitted to make interest-bearing payday loans to non-Jews, but not to fellow Jews." One commonly misinterpreted Judeo-Christian scripture that relates to interest and usury is Nehemiah 5:9-10. What is being discussed there is undue taxation, instead of interest-bearing loans, and so it refers to an entirely different animal. Historically, when it came to the business of charging interest, the Renaissance and Protestant Reformation brought about a sensible re-awakening. Religious leaders such as John Calvin, Martin Luther and numerous other luminaries proposed the only thing that needed regulation was "excessive interest." By 1461, Pope Paul II gave his blessing to the business of pawnshops. Therefore, interest bearing loans (from where payday lending directly descends from) attained popular approval. The words 'excessive' and 'unlawful' keeps getting brought up So possibly to show that payday lending and usury are two very different things, a secular examination is necessary. The Breitbart blog Big Journalism suggests that because various states in the U.S. set a maximum chargeable fee for payroll loans quite specifically, the law is established. So long as payday lenders operate within said laws, they do not fulfill the claim that payday lending is "unlawful" in the usurious sense. In terms of payday lending being "exorbitant" and "excessive," here is an additional Google search certainly of the word "exorbitant": "Greatly exceeding bounds of reason or moderation" Large Journalism asks what defines "reasonable" when it comes to payday lending and usury. It's all essentially relative. A potential borrower will more than likely keep away from taking out paycheck loans if he/she concludes that the rate charged on such loans is unreasonable. If a potential borrower wants to borrow money at what they feel is a reasonable rate, but a lender determines the requested rate unreasonable for their business, then the lender will not assent to the payday loan. An rate of interest that is mutually reasonable cuts to the very essence of how a free market economy works. A vast number of payday lending transactions occur, so that indicates that both the borrower and lender have been in agreement in terms of reasonable interest rates. Therefore, payday lending is neither unlawful nor unreasonable, as Big Journalism puts it, and there it is not an instance of usury. Revisiting Nehemiah 5:9-10 payday lending - where rates are both lawful and reasonable as per the above example - is not condemned within the scriptures. It does forbid usury, as do numerous secular laws worldwide. They are distinctly separate concepts. The danger in payday lending is the fact borrowers can use such loans in any manner they please, including irresponsible spending (for impulse buys, or taking a lot more than what they can realistically afford to pay back). The responsibility falls on the borrower to make the decision on what best suits their financial situation. The vast majority of payday lenders have income requirements in place to protect not just their business, but consumers against a ruinous financial situation. A good number of studies have shown that 94 percent of payday loans are paid back on-time, so the safeguards in place appear to be both legit and reasonable. It doesn't take someone with the qualifications of Big Journalism to reason that such is the case. |
