The Critics Of Payday Loans: What Do They Want |
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If you're enthusiastic about taking payday loans, just forget about them! Payday loan lenders are about to see tough times ahead. The Consumer Federation of America and the National Association for the Advancement of Colored People have raised their eyebrows on this industry. Apart from restrictions on interest rates, fees, maximum advance, maximum term, and the number of allowed rollovers, several states are planning to enforce new laws. Some of these laws might pose a threat to the payday loans industry. Payday loans are despised by names like debt trap and predatory lending. The politicians have been sneering at these loans with a view to creating a crisis for their political gains. At present, payday loans are regulated by 33 states. The number of payday loans outlets in the country has risen steeply from 17 in 1995 to more than 300 today. Some lawmakers are of the opinion that the industry is exploiting people having little knowledge of finance, by giving them expensive, short-term loans. Despite of the high interest rates on payday loans, about 10% of Americans go for them. These are usually people who are not affluent and are in a need of short-term payday loans. The urgency of money compels people to pay high interest rates on such loans. The last two and a half decades have witnessed a significant rise in the money been lent as payday loans. Today, payday loans worth $25 billion are been given away annually. The payday loans industry has won the hearts of the Americans. It has saved many a customers from the embarrassment of being penniless. Taking a payday loan is better than paying a penalty to the bank for a bounced check. Payday loans industry is highly consumer-driven. Due to the overwhelming response of consumers, payday loans industry has managed to spread its wings across the country. Payday loans are not for every financial need. They're only for emergencies. It would be a bad choice to take payday loans for paying off long-term debts like home mortgages. Moreover, not all borrowers who take payday loans are poor people. Some of them are quite well off, with a high education, bank accounts and their own homes. Yet, due to adverse circumstances, they have been pushed into a financial emergency and are in a dire need of short-term loans. People in need of money have other alternatives too, like a pawnshop or a loan shark. But a survey has showed that only 1% of people opt for other alternatives. The rest of them prefer payday loans. The payday loans critics are turning a blind eye toward the immense help these loans provide during an emergency. For someone entangled in a desperate situation, such as a medical emergency or urgent car repair bill, payday loans are a boon. If such loans had not been there, it would have caused increased costs and pain, and a great loss to people in need. But the critics don't care about the needs of people. They are clinging only to the flipside of the payday loans, i.e., high interest rates. They refuse to consider the broader and brighter side of these loans. Can any of these noisy critics explain how to get a typical bank loan for as short a period as 24 hours and for a meager amount? If not, then it's better that they find some other topic to attack on. Removing the means of meeting tough situations without considering those tough situations would put people in a tight spot. The tough situations would stay there, but the means to eliminate them would not be available any more, resulting in a financial panic. It's borrowers who should direct the future of the payday loans industry, and not the government. The people of the country are smart enough to determine what's best for them. Thus, payday loans should not be looked down with contempt, but should be promoted in the interest of the population. |
