Each year, there are more and more payday loan lenders popping up online. As certain state regulations continue to control the online and storefront lenders, the growing need and dependency for these short-term loans increases for everyday people. In some states, the average payday loan lender customer will take out between five and eight short-term loans each year. If the average loan is for $300, then the potential low cost fee would run up an extra few hundred dollars towards unnecessary fees each year. The fees paid for obtaining the loan, not for any interest or NSF fees which may occur if the loan is not paid off on the original due date, would be beneficial staying in the bank.
Formal regulations for all payday loan lenders online or at the "brick and mortar" locations may progress as more and more politically driven groups ignite their efforts to limit the low cost loans to people. Once more regulations restrict these lenders or payday loans are banned from doing business in more states, what would people do?
There would still be debt and the high risk of multiple defaults. The low cost money from payday loan lenders helps get bills get paid on time and without this option:
*Bills will be paid late or not at all.
*Credit scores will fall.
*People will have to learn to cut back on spending.
*Secured loans will collect collateral.
*More homes will be lost
*More time spent away from the home with second jobs or side jobs.
Limiting options for people can cause more problems for household budgets than the payday loan lender would create. It is easy to target the payday loan lender as the culprit behind budget disasters. Regulations are created to help prevent people from sinking into debt beyond their income capabilities. Most people who go to these lenders for short-term loans are looking for help to deal with debt which is already causing budget problems. The blame should be pointed at unexpected costs which pops up and takes over income and/or people living beyond their means then running out of other credit options to make the monthly payments.Without access to fast cash loans, fewer options for quick cash can create financial situations similar to those the regulations are trying to protect against. It may push people into working harder at spending less. A PEW study found that people choose to use payday loan lenders rather than having to cut back on costs. It would take some budget education to help people redo budgets and learn how to live within their means.
We are products of our society. Our country offers opportunities to have more than we need. Marketers do their jobs well when we are enticed to purchase items and services which we could go without and still live happily. Responsible shopping is sometimes engraved in our early childhoods and often times a learned behavior as we get out into the workplace and use credit cards as a means to spend more. These habits are tough to break. Regulated payday loans lenders can still help with extra costs, but banning them altogether could lead people down a more financial destructive path.
