Payday Loan Brokers: The New Lender of Last Resort

Payday loan brokers - and loan brokers of almost any type - tend to carry a pretty negative reputation in today's economic community. There hasn't been a greater mistrust of the financial world in decades, and many Americans are wondering where it will stop. With terms like "bail-out packages," "lenders of last resort," and "mortgage crisis" being thrown around like condolences at a funeral, there has also never been a better time to become more educated about your choices as a consumer in the midst of an economic crisis.

Lender of the Last Resort

A lender of last resort (LOLR) is exactly what the name implies: a company willing to extend credit when all other companies refuse. In the case of AIG and the Lehman Brothers, the U.S. government is the potential lender of the last resort, since it has developed a bail-out package that will provide a big enough loan for the companies to pull themselves out of bankruptcy and tighten up some of the loose ends wreaking havoc on the economy for the rest of us. Because no one else is willing - or able - to support these companies, it falls on the LOLR to come up with a solution, even though most people are in an outrage over the possibility.

Payday Loan Broker Parallels

In the same way, payday loan brokers are a lender of the last resort (albeit on a much smaller scale). While large companies like AIG certainly aren't going to turn to cash advance companies to offer them the trillions of dollars they need to get back on their feet, the smaller entities of the business world - the average consumers - are.

The entire purpose behind an LOLR is to pull someone from near collapse and help them to regain their footing. It's not always the popular choice, and it's not always the most ideal choice, but in the face of no other opportunities, it is the only one that will actually work. Payday loan brokers are willing to step in when no one else is; when banks, credit card companies, family members, and employers all refuse to help an individual out of a tight financial situation, payday lenders can almost always be counted on to fill in the gaps. Yes, they're making a profit in the end, but the U.S. government is also looking out for number one as they make their way through the bail-out packages.

The bad reputation of the U.S. government in today's economy and the bad reputation of payday loan brokers are no coincidence. No one likes to be reminded of the fact that there are many individuals and businesses in need of help, yet without no real recourse for them to get that help. Before we condemn these organizations to the criminal element, it's important to remember that the "last resort" - no matter what the subject matter - is rarely pretty.

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