What Consequences Governmental Limitations Bring To Payday Loan Lenders And Consumers?

It is a shame that some payday loan lenders have blackened the reputation of honest ones by collecting illegitimate loans from their customers. There is no word to describe these scams leaving people without financial back up.

Nevertheless, not letting payday loan lenders to operate worsens everything for the simple reason that with disappearance of payday loan lenders the need for short term financial options will continue to grow, and there will be no options of same utility.

The most important thing, however, is to inform and educate customers to prevent scams from succeeding in stealing individuals' money.

It isn't fair that responsible lenders should suffer from scam-targeted restrictions in legislature. Lenders from Community Financial Services Association of America (CFSA) are responsible work in absolute accordance with their customers' state's legislature.

With a number of states legally limiting payday loans' interest rates to 36% APR, many lenders had to close their stores, which in its turn leads to fewer financial option for individuals in need.

The thing is that cheap payday loans have small term equal to 30 at maximum. So they cannot be compared with long term loan on the basis of interest rate. But they are somehow classified the same anyway. Here is an example: 36% APR for $100 payday loan is some $1.38. The sum evidently less than all the processing associated with the loan.

Such policy results in people opting for offshore internet lending and other inconvenient sources of quick money.

Limiting payday loan lenders to 36% cap brings about a lot of negative consequences: people lose a credit option they like to use, hundreds stores are closed and thousands of employees lose their jobs. So this so-called consumer-conscious policy results in more difficult financial situation.