There was a time when the arrival of a check-cashing shop signaled the death of a neighborhood. It meant your community had strayed as far as it could get from the halcyon days, that its own financial institutions either no longer existed or were unable to serve a growing percentage of its citizens. But that was before the bottom dropped out of the economy time and again (i.e., 1970s, 1980s, 1990s, 2000s), before no-questions-asked check cashing became the norm in so many communities. Today cities throughout the Rust Belt and beyond are littered with payday lenders pandering to those with no bank account, bad credit, or a combination of financial hardships.
Payday lenders – or “deferred presentment service providers,” as they call themselves – are painfully pervasive in the city [of Detroit]. While 15 states have banned payday lending, Michigan embraced the payday lending industry with the passage of PA 244 in 2005. Lenders are allowed to charge some of the highest rates in the country with little risk of enforcement or real penalties. Due to this relative freedom, payday lending has proliferated. Detroit is especially inundated with these predatory businesses. With 44 payday lenders, Detroit has nearly five times more lenders per square mile than Oakland County, and more than three times more Macomb County. There are more payday lenders than bakeries, and more than two payday lenders for each produce market.
The issue of payday lending is a complex, symbiotic affair. If they were to disappear, those who rely on the services might face more difficult financial challenges. But as it stands, loyal patrons are the ones being exploited the most.