It’s easy to find fault with payday lenders. Many American families are still trying to recover financially from the wave of abusive mortgage lending that contributed to the collapse of the global financial system, and they see companies charging interest rates in the triple digits on short-term loans as an easy target. The wave of predatory mortgage loans devastated the finances of many families, and it has taken them a long time to recover.
However, average customers shouldn’t expect much help from tighter government regulations on them. On Thursday, federal officials announced their intention to crack down significantly on the “payday lending” industry, which consists of small businesses that offer short-term loans at exorbitant interest rates to people who have nowhere else to turn for money to cover expenses like rent or car payments.
Current Changes
The Consumer Financial Protection Bureau, which was created by Congress in response to the abusive mortgage lending practises of the early 2000s, said that vulnerable borrowers need to be protected from predatory practises that create “debt traps” for millions of households living from inadequate paycheck to inadequate paycheck. It was in reaction to the predatory mortgage lending practises of the early 2000s that Congress created the Consumer Financial Protection Bureau. However, low-income American families will continue to suffer whether the regulations are followed or not, until salaries begin increasing more in step with the rise of the rest of the workforce. Regardless of whether or not the regulations are put into place, this will occur in easy payday loans online – quick application – slick cash loan.
The upward climb was a gruelling ordeal
The United States economy has started to show signs of recovery from the Great Recession, but pay increases continue to favour the wealthy. When adjusted for inflation, the weekly wages of the lowest 10 percent of workers have fallen by 3.7 percent since 2000, while the wages of the lowest quarter of workers have fallen by 3 percent over same time. Top earners have seen a 9.7 percent gain in their real salaries over the last year.
- Payday lenders have been criticised for being part of an exploitative and deceitful business that takes advantage of desperate customers by offering them high-interest loans that they can’t afford to repay. Payday lenders, in response to these claims, have said that their business model does not include any of these questionable practises. As a result, over half of all states either outright ban payday lending or cap the interest rates that lenders may charge their customers.
- Despite the fact that it is unlawful to give this kind of financial service to the millions of low-income families in the United States that struggle each and every month to make ends meet, the demand for it has not diminished.
- Approximately 12 million individuals in the United States take out a payday loan each year, with the average borrower taking out eight loans with an average value of $375 and paying a total of $520 in interest, as reported by research performed by The Pew Charitable Trusts.
Conclusion
Customers in this position, who have the financial means and credit history to qualify for low interest rates, may see the fees associated with borrowing as the actions of an immoral lender preying on a borrower who is otherwise helpless.
