Payday lending falls off a cliff as pandemic continues in Washington state
With so many people out of work, you might expect Payday lenders would be raking in the business. But that’s not the case.
Dennis Bassford is the CEO of MoneyTree, a Seattle-based company that makes short-term loans at high interest rates. He says his business is down 75%.
“We laid off 160 people this week, I laid off 35 people at the end of March, and I’m closing over 20 stores,” Bassford said Friday.
That’s almost a third of his workforce he’s laid off, despite the business being open when many other businesses are closed.
Bassford offered a personal example to explain why his business isn't better.
“Before this Covid event, I was thinking of buying a car. I’ve decided not to buy a new car,” he said. “If you are optimistic about your prospects to remain employed and have future income, any of us are more inclined to spend money and borrow money, as opposed to a time when you’re fearful.”
Also, with so some stores closed and restaurants not seating people, there's less to spend money on.
Whatever the reason, people are saving money rather than spending it. The U.S. personal savings rate hit 33% in April, the highest it’s ever been.