The integrity of the payday loans industry has been cast over by a shadow of public opinion, largely shaped by the anti-industry campaigns which blame payday loans for trapping consumers into cycles of debt with high interest rates.

This anti-industry rhetoric has largely defaced the payday loans industry, and legislation has been passed in several states limiting the industry’s activity or outright banning them altogether.

As you may recall, Ohio recently passed legislation causing 79 brick and mortar payday loans stores to close. They were not being prevented from operating in the state but the interest rates were capped significantly reducing their profit margin to such an extent that they couldn’t be profitable. Proposition 200 in Arizona was putting similar restrictions on the industry as well.

Today’s Objective

This article will be an attempt to cut through the propaganda that you may have heard in regards to the industry, and give you the real facts as they are easy to understand.

I can’t tell you that this is a non-bias article as I am a staunch believer in preserving our financial freedoms, especially when it comes to my own money AND what I choose to do with it.

I also post quite frequently to this blog and as you may have noticed, but this blog isn’t just about payday loans, cash advances or short term installment loans. It offers its readers a wide consortium of financially related articles instructing readers on how to exercise financial responsibility, save money, and help secure their financial future. Payday loans are just a one facet of Personal Money Store. Even so, we have had our own share of attacks by those who oppose us and the services we offer to our clients.

That being said, I will be gracious to the concerns of our opponents on the other side of the fence.

Payday loans provide consumers with emergency cash services.

What is a payday loan?

I suppose defining what payday loans are should be our first course of action as some of you may be visiting for the first time. You can click on the link above for a little more insight, but basically payday loans are a consumer loan under $1500 dollars that is given on a two week term or until your next payday.

These loans are largely popular due to their speed of approval. You can apply both online or in person and with very little qualification criteria. Funds are deposited into your account within a couple hours making payday loans a prime candidate for circumstances which call for emergency funds. This could be anything from car repairs so you can continue going to work each day or maybe to cover the last hundred dollars of your mortgage payment to avoid the steep payment penalties.

Sound like a service you may want to take advantage of someday?

This is a service that offers many benefits and advantages for today’s consumers. So why all the media slander?

Lobbyists against the payday loan industry exaggerate the truth to their own advantage in order to win over the public’s opinion. The biggest exaggerated truth is in regards to the Annual Percentage Rates charged by the payday loan industry. The rates quoted by our opponents are not necessarily false but they are not explained in a way that is fair to the industry either. Allow me to explain this further by comparing an opponent’s statement and then further explaining it.

Our Opponent’s Statement-

Payday loans charge 396% interest

Consumers Understanding-

Borrowing a payday loan may cost them 4 times the amount of the loan in interest charges.

The Truth Made Clear-

396% is the Annual Percentage Rate. The Consumer would have to pay this if they borrowed a two week pay day loan and allowed it to lapse for an entire year or 26 times in a row without every paying a dime towards their original loan amount.

Don’t you love how politics work? Opponents of the industry simply fail to give the consumer a fair understanding of the issues to advance their own agendas. Before legislation passed in Ohio capping interest rates at 26%, 400,000 registered voters signed a petition supporting the payday loan industry.

These consumers were educated on the issue and did not want to lose the service which the payday loan industry provides them. They didn’t want government legislation interfering with their freedom to choose how they want to spend their money. 26% APR rates, by the way, allow payday loan stores to only profit about $1.08 per $100 borrowed. It’s no wonder 79 stores closed. Those which survived were more diversified in other businesses than their counterparts, which helped them when the caps fell on interest rates.

The Attacks on the Industry Continue

Opponents of the industry are not letting up! They are now trying to shut down the industry’s online endeavors. They are currently trying to bar the Payday Loan Lenders in Nevada from making any loans on the internet. Our opponent won’t cease in their efforts to crush this industry until they have done just that. We are not requiring anybody to take a payday loan, we just want the consumer to have the right to do so if they see it as a fit solution for their problem.

Don’t you deserve that opportunity as well?

This was just one of our attackers manipulations against you, our clients, and our industry. I hope this has shed some light on the truth in regards to payday loans and how they work, and that you, regardless of your opinion of payday loans, preserve the right for yourself and for others to make this choice instead of letting the government make it for you.

We will address a couple more of these anti-industry accusations in part two of this series. Just look for the post entitled,

“Payday Loans | Cycle of Debt or Cycle of Irresponsibility“

Thanks for visiting the blog today, leave us a comment and let us know how you feel. We always appreciate your feedback.

-Personal Money Store