Is Payday Loans A Failure Of The Free Market?

The title of this article may be a bit surprising; however, when you really stop and think about it, the answer is yes. Why is it surprising? Because in the United States the payday loan industry has become so regulated that it is totally banned from spending a single penny on advertising. Now don't get me wrong, I believe in free markets and I'm also very much pro-commerce and I think you should let the free market decide what it thinks is fair to consumers.

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However, the payday loan industry has become too protected by government intervention that it no longer deserves the protection it once received. As long as the government thinks it's fair then it's fair. And when it comes to business, I've always believed that the customer is always right. That doesn't mean I'm for free-market capitalism, although I do believe in using it. What I am against is a "free-market solution" which results in a failure of the free market.

Here's how this works. Let's say you go down to your local bank and apply for a payday loan. You're not very sure about where to apply, so you take a quick look at their website. Oh, yeah, they have payday loans. Then you decide, hey, I know why they have payday loans; it's because that is what people need. That's why payday loans are so great; because they solve the customer's problems.

That's fine; however, if you look at the government intervention involved in this payday loan market, you'll see the rules and regulations vary from state to state. Some states have almost no restrictions, while others have almost too many. In addition, some states are attempting to regulate interest rates, which are already pretty high, but never mind; if a payday loan company can get away with it, they will. So are payday loans a failure of the free market?

No, they're not. They are a necessary part of the free market, as I've written before. However, I would submit to you that the government shouldn't interfere in this area at all. The market is working well enough on its own. Why is it necessary for the government to come in and control things?

Well, let's look at why payday loans are a failure of the free market. In order to understand this, you have to look at how competition works. When there is too much competition, the consumers or customers feel like they are getting the best deal, and everyone can make an informed decision with the best financial guide. When there is too little competition, or no competition at all, people are forced to go to some sort of middleman, whether it be a payday loan store, a lawyer, or even their friends and relatives.

This is where payday loan stores shine. Without them, people would have to find other ways to get money, such as borrowing from family and friends, or using check cashing machines. All of these options are inconvenient, because they involve a middleman.

But by eliminating these middlemen, payday loan stores can take a bite out of their business and help create more competition. This is the free market working its job, and the consumer gets what they want. Isn't that great? Now do you see why you should support insta cash loans? Seriously, ask yourself that next time that you're down on your luck and need some extra money. It's easy, it's fast, it's convenient, and it could change your life.

You don't have to put your entire future on the line, hoping that someone else will lend you the money for you to pay your bills. There are no collateral requirements, and most people will qualify because they don't have a good enough financial history to qualify for a traditional loan. Also, because there is no collateral, your credit score doesn't go down because you went with a payday loan or instant installment loan store. So in other words, there's no reason not to go ahead and take advantage of this awesome opportunity, even if you're a little worried that you just might lose your mind with the process.

So are payday loans a failure of the free market?

No. They are a way to give people a little extra boost during tough times. The government is trying to protect people from themselves, by making these small loans so accessible. And if you can go ahead and trust someone else to walk you through the whole process while you sit back and take a deep breath, it's a win-win situation for everyone involved. Even better, if you can find the right lender online, then you could be paying back your loan in a few days instead of the week or month that it would take you otherwise.

Are payday loans a failure of the free market? No. They are a very viable option for people who need a short-term loan to help them make ends meet until their next paycheck. The only reason that they're frowned upon in some circles is that they encourage people to take out loans they can't afford, and then they wonder why they end up in debt. But if you look at it from the bright side, these loans aren't really meant to stay around forever. Eventually, they'll all be gone.