(The Coloradoan) - Payday lenders don't require a credit check, but mandate that borrowers have both a checking account and a source of income.
In general, people with savings in the bank have no need for payday lenders. Instead, the payday loan stores are most often used by borrowers who can't go to a traditional bank.
The poverty level for a single person in 2006 was $9,800; for a single parent with two children, the threshold is $16,600. The "average" payday loan customer earns $28,440 a year.
An analysis by Assistant Attorney General Paul Chessin concluded that despite state regulation of payday lenders, "Colorado payday loan consumers also often find themselves trapped in a cycle of debt. Indeed, it is the repeat customer who accounts for the overwhelming majority of the payday lender's loan volume and revenue, its bread and butter."
"I run out of money toward the end of the month and I have to buy groceries," said the 42-year-old woman, who asked not to be identified because she receives disability payments.
Disability and other government payments are considered a suitable form of income for granting payday loans, under the law. Ron Rockvam, president of Colorado Financial Service Centers Association, the state's payday lending association, said many of his customers are state employees who get paid monthly, including the Division of Wildlife, the Colorado State Patrol, and teachers.
A payday loan is cheaper than the fees for bouncing a check, credit card late fees or a utility reconnection charge, Rockvam said.