Despite large problems like a state budget that remains in shambles due to rampant government spending, California legislators are reportedly hard at work to come up what they consider to be a responsible lending approach to payday loan lenders. Instead of allowing people to determine for themselves, lawmakers would rather hamper payday lending and eliminate the need for consumers to learn responsible behavior. Pay1Day writes in a recent press release that the legislative squeeze is sending quick loan companies out of business as profit margins become difficult to build.
Source for this article: Goal should be responsible lending, not a lending crackdown by Personal Money Store
Responsible lending means exercising informed choice alternatives}
An over eagerness to ban cash today is not a shift toward responsible lending in any context of this free market economy. The reality is the facility and expense of such quick personal loans from payday loan companies are much more relative. The recessionary economy and its resulting credit crunch have limited the opportunities for numerous consumers who need short term credit. Sagging employment numbers don’t make this crunch easier to take. Bills nevertheless must be paid; life’s emergencies continue. Yet financially fat lawmakers who don’t understand the need for extra cash are the ones making decisions, instead of consumers in need. Hence, they do not see the ill in removing such choices from the short term credit market with overzealous regulation.
Expenses and consequences under review
Most borrowers aren’t impulsive with the quick loan, says Pay1Day; they’re just trying to keep away from something financially worse. Given that overdraft, mortgage default or defaulting on utility bills is more expensive, consumers with less than perfect credit tend to side with the quick loan. Quick loan APR is high compared with what a small bank loan would require, but numerous consumers can’t qualify for such bank loans.
Why are quick cash loans relatively expensive?
Despite what the Center for Responsible Lending believes, loan lenders don’t attack customers with 391 percent APR to cause pain. Taxes and other legislation create operating expenditures that lenders must recoup in order to function. If legislators squeeze harder, most lenders will close their doors and jobs could be lost by the thousands. Consumers also get the short end of the stick in reduced choice.
Thus, Pay1Day suggests that California and other states can maintain price-regulating competition within the market and inform consumers about their lending choices through educational programs. Educated consumers should be allowed to make their own choices. A free society and a nanny state simply do not belong together. Restrictive government that does not allow for self-determination is not teaching everyone anything.
A lot more information on this topic
prnewswire.com/news-releases/dont-limit-payday-lending-promote-responsible-lending-instead-96784599.html
benzinga.com/press-releases/10/06/p334380/debt-free-league-warns-financial-reform-bill-won-t-reduce-debt-schemes-
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