Payday Loan Lowdown

Things seem to be getting brighter and brighter on the payday loan front — sorry, it is only getting brighter for consumers, not the payday firms. New Mexico Gov. Bill Richardson and Attorney General Patricia Madrid recently filed new payday lending regulations that are supposed to better protect consumers against predatory lending practices. Charlotte.bizjournals.com reports:

The regulations would require all payday loans be interest free and charges would be capped at $15.50 per $100 loan. It also would allow consumers to enter into a longer payment plan, a minimum of 130 days, after a second renewal of the loan. Consumers would be allowed to borrow only amounts not greater than 25 percent of their gross monthly incomes.

Read more: State officials file new payday lending regulations

Three cheers for Oregon Governor Kulongoski who recently announced a new consumer campaign — including a 1-800 hotline and web site — promoting payday loan alternatives and encouraging working Oregonians to avoid these high-interest loans. These new tools are expected to help people realize that there are better alternatives for consumers than payday loans charging up to 500 percent interest. Salem-news.com reports:

By calling 1-800-SAFENET or visiting www.211info.org, consumers can find information about payday loan products offered by Oregon credit unions with significantly lower interest rates and fees. The website and 1-800 number can match consumers with credit unions they are eligible to join that offer the payday loan alternatives.

Read more: Oregon Introduces Hotline And Website Promoting Payday Loan Alternative

You know what, I feel like playing the devil’s advocate today. Quite a few people’ve asked me why I always write bad stuff about payday loans. And they seem to have a point — I mean if I am writing a blog on payday loans, how come I never have anything good to say about them? Point taken.

One thing good about these loans is that they are an ideal source of quick cash for employed people with emergency cash needs. If you are in need of some cash in a hurry and can repay the amount borrowed with the fees within a short time interval, a payday loan is the thing for you. It’s another thing that most people can barely manage to repay the borrowed sum, and I haven’t even begun talking about the interest.

Fine, so where was I? So, what is it that makes payday loans so lucrative over other forms of loan? The fact that it is fast to secure. Of course, at the cutthroat rates that they offer, this is the least they can do in the form of customer service. Other benefits include the lack of a credit check and a history of bankruptcy does not compromise your chances of securing a loan. Wow! I mean, these guys are the most responsible lenders I have ever sawed! I mean they don’t want to know if you can repay. All they want is a check from you and they’ll lend you the money.

And if the APR rate is unusually high, don’t blame the payday lenders. After all, you should understand that it is a high-risk industry. So, the APR rate has to be kept high to justify the high risk.

I could go on and on like this forever and yet we would lead nowhere. I know payday loans are not bad — as an idea! But the idea needs to be worked on. In its present form, it is unacceptable but with a few tweaks, I’m sure, it’ll turn out to be one of the best financial tools of the 21st century. Go on, call me an incurable romantic!