Pay attention to the Payday loan Pundit
Whether you need information about a payday loan or want to keep up with financial news and tips, Personal Money Store is your source. However, we’re not the only game in town. The Payday Pundit has a keen insight into the comings and goings of the cash advance> industry and loads of sound consumer financial advice.
Recently, one of the Pundit’s readers commented on what overregulation is doing to the payday loan industry and consumers alike. Cash Advance Mojo would like to share their thoughts here:
In my opinion, the legislators are just covering up their own incompetence with regards to regulating the payday loan industry. How many people in state government have ever taken a payday loan? The problem is that they are not ‘middle class’ people and they don’t understand the product. Instead of taking the time to understand the product and coming up with viable regulations, they decide that its best that they put in a rate cap that puts lenders out of business (some are even ignorant enough not to believe that!).
Their lack of understanding causes weak oversight and allows some lenders to use abusive lending practices (such as charging excessive interest). If they actually did their homework, stopped looking down their nose at a business they hardly understand (and its customer base), and worked on a more universal approach to regulation, they would do the business and the public a great service.
It is the state governments, not the lenders, that are to blame for the controversy over this essential product for the public. Anyone who says otherwise has either been raked over by a non-reputable (poorly regulated) company or has never had the need to look for a short-term loan.
Hold your elected officials accountable; your vote is power
If government had any real idea about the difficulties their average constituents faced on a day-to-day basis, politics as we know it would be entirely different. A payday loan is a useful tool. Once regulators begin to understand this, perhaps valuable time can be spent considering problems that need fixing.
This guy is right on – the costs of a ban would far outweigh the benefits. There is no good done by driving a multi-billion dollar a year industry out of business, and thousands of employees in the process, when there is a clear demand for the service. Well, unless you’re Bank of America.