In response to a recent op-ed on this blog defending payday loans, Rep. Linda Sánchez, D-Calif., countered that payday lenders create “debt traps” by forcing borrowers to take out additional loans to repay escalating interest on their original loan. I agree that this is a terrible cycle of debt for those who can least afford it.
However, Sanchez is inaccurate and misinformed when she lumps the traditional installment loan industry together with the payday loan industry. There are significant differences.
Read the full story here: http://www.americanbanker.com/bankthink/dont-lump-in-installment-loans-with-payday-1077653-1.html