Joanne's life wasn't all that easy. One day her husband decided that he didn't want to be married and disappeared. He left her with a small child, and an overdue rent payment. Joanne knew; be it good times or bad, life had to go on. She got herself an almost full time job working at a local restaurant. She knew that she needed childcare, so she did a bit of shopping. She discovered that childcare wasn't cheap. The average cost for "daycare" was in the neighborhood of $50 a day. She finally found a place that would take care of her daughter for $20. This seemed like a lot of money, but it evidently was a "bargain." On her first week of work, she managed to bring home $275 including tips. Not too bad a wage for a not quite full time job. Childcare, rent and the utilities took a big bite out of her wages, leaving very little for food or anything else.
Joanne just knew that if she was careful, she could make a go of things. She was promised more hours at work, and if she could work evenings, her tips would be better. She spoke to her grandmother. Grandma Ellen had some health problems, but agreed to take her daughter for some (but not all) of the time. Joanne was still short on funds. Her landlord was a friend of her parents and gave her extra time to catch up on her back rent.
Joanne thought that a short-term loan would solve all of her problems. She didn't have a savings account. She and her husband had a joint checking account, which she had recently transferred into her name only. Her account held a balance of $29.50.
She spoke to her bank about getting a short-term loan. They explained that she had not established any credit and had no employment history. They told her that bank policy prevented them from making unsecured loans. She was out of luck
It was a small storefront. A neon sign read: "Checks Cashed, Title and Payday loans, no credit checks required."
Joanne thought to herself "What the heck," and walked in.
A man in a brown sports coat, open shirt and a large gold chain greeted her.
He didn't look like a banker.
"I need $200," said Joanne.
He introduced himself to her as Mr. Nice. He said that he was a loan officer. He explained that his company offered loans to meet immediate short-term cash flow problems. He told her that he could offer two types of loans. One would be a payday advance, the other a car title loan. "We don't do long term financing." He said. "Our payday cash advance loans are due at the end of 14 days, and our car title loans are due after 30 days.
"Do you have a Job? Do you own title to a car? Do you have a telephone?" He asked. He went on to say that in order to qualify for a loan Joanne needed to be able to prove employment, and have an active checking account.
Joanne had an active checking account, but had a problem proving that she was employed. She had a "pay as you go cell telephone" but no wired home phone. Theoretically she should not have been eligible for a loan, even under the terms set by this payday lender.
Mr. Nice flashed a big smile and quietly told her. "We are not like a bank. I am going to trust you. What I need from you is a post-dated check to my company. On unse