The South Carolina House gets it
Your payday loan news source has been keeping an eye on the South Carolina legislature lately as it relates to short-term consumer lending. From the time that legislation was introduced to when it reached the House for a vote, we’ve been watching. House Speaker pro tem Harry Cato even published an opinion piece in a local South Carolina newspaper that was in favor of fair regulation.
Now, Seanna Adcox of the Associate Press reports that the bill was approved by the South Carolina House with a 93-16 vote. As a protection to consumers, the bill allows them to have one loan at a time, up to $600. In addition, an online database that will be operational by February 1, 2010 will record when loans are made. Cash advance lenders will be required to check this database each time a consumer applies for a loan. Customers who are approved will also have the option of an extended payment plan if they are unable to pay within the standard two week’s time.
Consumers use payday loans in moderation, not 10x in a row
Another part of the bill limits customers to 10 successive payday loans. After that, they must wait until at least one payday has passed before they can apply for another. Payday loan critics don’t feel these requirements aren’t strong enough. Cash Advance Mojo feels that if the most recent statistical research from the Federal Reserve is any indication, almost nobody is using 10 payday loans in a row. The cited payday loan study by the Federal Reserve’s Gregory Elliehausen indicates consumers only use the loans in a moderate fashion.
Yet there will always be naysayers. Rep. Joe Neal said legislators should be “ashamed for allowing payday lenders to exploit residents.” But fellow House members like Speaker Bobby Harrell know better:
Regulating the practice and enacting consumer safeguards is the right thing to do. These loans are meant to be short-term financial solutions for unforeseen expenses; capping the loan amount and creating a statewide database to ensure that someone can only have one loan at a time will help prevent individuals from falling into a bottomless cycle of debt.
A payday loan is indeed a short-term financial solution. There is no shame in making an informed choice about your finances when emergency cash is needed.
It’s commendable that the South Carolina legislature decided to make the business better for both lender and borrower. With this kind of regulation, it keeps businesses from having to close and drive up unemployment, and it ensures income by cutting off anyone’s ability to take out multiple loans at one time that they can’t pay back, thereby costing the lender money. Fiscal responsibility – it’s good.
Finally!!…….something intelligent happened.
What can happen to a 77 year old woman who is allowed to have 6 payday loans at various locations but can’t afford to pay them? A few months ago she was allowed to have 600$ at a couple of them and can renew the loan as soon as she makes the payment,no delay.Please inform me. Thank you, G