Analyzing The Vision Of Short Term Lenders Essay

954 Words4 Pages
In early 2011 unemployment was rising, economic growth was stagnating, and families were panicking about making ends meet,all while legal loan sharks were circling the poor. With consumer credit becoming less available, and banks more rigorous in lending to consumers, there has been an increase of payday loans and short-term lenders representing sub-prime lending bussinesses. These institutions specialize in offering fast cash and fast loans, both of which are strongly advertised via different media platforms such as a website, television, andradio stations(Aldohni, 2013). Desperate consumers seeking these short-term financial solutions often end up with long-term financial disasters. The promise of easy credit without a credit history does not come cheap;sometimes costing consumers an Annual Percentage Rate (APR) of as much as 4000 percent. Calculating the terms of loans using a risk-based pricing system, subprime lenders are able to generate varying interest rates of which they offer to borrowers with varying credit histories.(Investopedia).
Aldohni (2013) examines the vision of short-term lenders, drawing on the legal and conceptual changes in the United Kingdom’s consumer credit sector that aided their spread. He arges two main ponts: 1) the first of which is that short-term lenders are no different from loan sharks, and 2) that the legal system fails to provide protection for vulnerable credit consumers. Also, according to Aldohni (2013) changes were witnessed to the
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