Posted on Mar 2, 2016
Do you think government regulation is needed for Payday loan companies?
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The Payday loans industry is allowed to charge up to 75% interest on loans up to $500 and the loan can rollover up to 6 times allowing interest to on the loan to exceed 75%. A study found that the average Payday loans is for $391.64 with a final interest rate of 451.91%.
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Posted >1 y ago
Responses: 11
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I guess I'm going to be the one that goes against the grain here. Part of the problem currently being faced in the United States, and much of the world, is we have established a culture of blame rather than one of accountability. We have stopped holding people responsible for their own choices and actions. The only real regulation that should be on these companies is that they must ensure their contracts are very clear as to what the person is agreeing to. A big problem in this nation is that everyone wants to turn to government to be the "parent" and act like everyday citizens are too dumb to make decisions for themselves. Last I checked, we are supposed to be a free society, but how free are we if we allow the government to continually make every decision for us and regulate companies out of business?
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It's about the level of regulation, as opposed to a binary choice of should or should not.
Payday loans exist because there is both a need and a market for them.
That said, they can be considered Predatory, which goes into the realm of Profiteering (something I am opposed to). The buyer should beware, however there needs to be a balance.
Payday loans exist because there is both a need and a market for them.
That said, they can be considered Predatory, which goes into the realm of Profiteering (something I am opposed to). The buyer should beware, however there needs to be a balance.
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CPT (Join to see)
Sgt Aaron Kennedy, MS Most people know there is regulation, but the regulation in place isn't getting the job done.
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Sgt Aaron Kennedy, MS
CPT (Join to see) - We must ask ourselves what the actual purpose of the regulation is then.
Is it to prevent "predatory" loans? Because if so, that's just not going to happen. That's why loansharks are part of the common vernacular.
Is it to reduce the average interest rate on loans, because many states already have usury laws on the books, but these operate outside those because of the Fee vs Interest structure.
Is it to establish actual "means testing" for loans? Because banks have those, but they don't offer "short term" loans with the convenience of these service providers.
Or is it perhaps... just perhaps this is a SYMPTOM of a problem, rather than the problem itself. These exist because there is a flaw in the larger economic system, not because there is a lack of regulation. Lack of regulation may exacerbate the issue, but it isn't the root cause. We must fix the cause, not the symptom if we want things to get better.
Is it to prevent "predatory" loans? Because if so, that's just not going to happen. That's why loansharks are part of the common vernacular.
Is it to reduce the average interest rate on loans, because many states already have usury laws on the books, but these operate outside those because of the Fee vs Interest structure.
Is it to establish actual "means testing" for loans? Because banks have those, but they don't offer "short term" loans with the convenience of these service providers.
Or is it perhaps... just perhaps this is a SYMPTOM of a problem, rather than the problem itself. These exist because there is a flaw in the larger economic system, not because there is a lack of regulation. Lack of regulation may exacerbate the issue, but it isn't the root cause. We must fix the cause, not the symptom if we want things to get better.
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