Payday Loans – Good or Bad?
More states seem to be going after the payday loan industry. Nevada, New Mexico, and Oregon are the latest states to tighten payday loan practices.
According to the Consumer Federation of America, 12 states effectively ban payday lending. These states are Arkansas, Connecticut, Georgia, Maine, Maryland, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, Vermont, and West Virginia.
In response to this legislative movement, the Consumer Federation Services of America, CFSA, which is a trade group comprising 150 member companies representing over half of the 22,000 payday lending locations nationwide, has begun its own campaign to educate the public on the myths versus reality of the payday lending industry.
One of the biggest myths the industry is trying to debunk is that payday loans are extremely expensive and have exorbitant interest rates. The CFSA compares the 15% rate for every $100 borrowed for a two week period to other commonly charged consumer fees. For example, the 15% rate on the $100 two week loan works out to an annual rate of 391%, which sounds pretty horrendous. On the other hand, the CFSA points out the the typical NSF and merchant fees a consumer pays if he or she bounces a $100 check is $54 and that works out to an annual rate of 1409%. Also, a $37 credit card late fee on a $100 balance works out to an annual rate of 965%. And, a $46 late fee on a $100 utility bill works out to an annual rate of 1203%.
From reading the information on the CFSA website, www.cfsa.net, I can see that there are two sides of the coin for payday lending. The sad truth is that there is a need out there for payday lending. But, at least the CFSA does seem to be trying to clean up the payday lending image and set standards for the industry.
For anyone contemplating using a payday lender, I would strongly suggest going to the CFSA web site, www.cfsa.net. This site provides a wealth of information on how payday lending works and what the consumer can expect from a reputable payday lender.
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3 Responses to “Payday Loans – Good or Bad?”
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Let me tell you something alright? Leading up to the time that we had to take out a cash loan, we didn’t see anything but negative remarks from others online about the cash loan industry. We ended up almost losing our car because we waited. At the last minute, we borrowed $400 from cashloancity.com and I really believe it is the only thing “at the time” that saved us. I understand that there’s a problem with some people abusing this industry and crying about it later, but what about the people that really need it and pay it back on time? We’re even getting ready to have a positive mark on our credit because of it. Why are the people that never need this type of loan the same people that keep others from being able to get one?
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