Tim Worstall recently took issue with the Center for Responsible Lending’s position that payday loans should be capped at a 36% annual rate. He seemed troubled by the fact that with such a rate cap in place, payday lenders choose to no longer make their predatory loans.
I’d like to offer some clarity. First, yes, it’s true — we do want to see an end to dangerous lending practices such as unaffordable payday loans carrying 300% and 400% interest rates. And second, I’d like to explain why payday loans are predatory.