Are Payday Loans Consistent with the Free Market – Yes

Per Wikipedia, a “free market is a market in which prices of goods and services are arranged completely by the mutual consent of sellers and buyers. By definition, in a free market environment buyers and sellers do not coerce or mislead each other nor are they coerced by a third party.[1] In the aggregate, the effect of these decisions en masse is described by the natural law of supply and demand.”

Based on this definition, payday loans ARE consistent with a free market. The very fact that so many payday loan companies exist is proof that consumers currently find them indispensable. Thus, they must feel that the cost is justified in how the provision meets the needs currently pressing them into a corner.

Just because payday loans are consistent with the free market in no way means that I think they are a good idea. The fact that so many people continually need to utilize these types of short-term, high-cost financial services points to a very distressing problem in our society.
And the problem is not so much the lack of money as it is the root causes behind it.

The list of factors that contribute to a lack of funds could span pages and pages of text. Factors such as health emergencies, broken relationships, layoffs, and vehicle problems, to name a few. And these, along with numerous other situations, are out of our control for the most part.

What I want to focus on, however, is education, budgeting, and self-control. How many of our society’s financial problems could be waylaid by early education on how to set AND LIVE BY a budget? How much debt could be allayed before it even accrued because of living ACCORDING to that budget and saying “NO” to non-essential items that would have to be purchased on credit?

Thankfully, there are awesome debt counselors available who can help with education and budgeting; counselors such as Dave Ramsey ( or Crown Financial Ministries ( to name two. Many churches are offering training classes taught by these counselors. In addition to adult teaching, there are resources available to teach teenagers to begin thinking responsibly about money matters.

In conclusion, although payday loans are consistent with a free market society, it is a sad state of affairs that places them in high demand. The answer is not to try and annihilate the payday loan companies, but to treat the root of the problem. This can be done in part by education, budgeting and self-control.