The federal government here in the United States is not shy about regulating industries to provide protection to its citizens. However, there are times when regulation runs amuck and causes more problems than it solves. The feds, via the Consumer Financial Protection Bureau, have recently been stirring up a hornet’s nest by proposing excessively strict regulations for the payday lending industry. As to whether or not the consumers these new proposals are supposed to protect are actually worthwhile is a question of ongoing debate. As far as payday loan customers are concerned, however, the ongoing interference that the government imposes is not good for them at all.
One payday lending customer, when asked if payday loans were in her best interest had this to say: “I’m a single, retired person,” she said. “I come here from time to time to make ends meet, to pay the bills.” The new proposals that the CFPB are trying to push through could very well leave people like this respondent with no other options when it comes to getting cash for emergency expenses, except to beg for a handout.
Dozens of payday lending customers were recently interviewed to find out how these types of financial services impact their life. All of the customers responded that they were well aware of the rates and fees associated with these loans, and that they didn’t mind them at all. In fact, many payday customers would much rather pay these fees than to have to resort to asking friends or family members for a personal loan. Unfortunately, for many of these people, the recent restrictions and upcoming proposed regulations have caused them to have fewer options when they need to take out smaller dollar, shorter term loans from payday lending companies.
Here’s an example of how payday loans help millions of hard working, lower income households. A person may be driving to work, hit some debris in the road and wind up having to pay for repairs on their brakes. If this person were to go to a mainstream bank to get a loan, they might be told that they would have to wait two weeks to get a loan approved. In the meantime, however, this person has to get to work in order to stay employed and to keep the money coming in. A conventional loan, in this situation, would be of no help at all. And being as big banks are very picky about who they lend to, it is possible that our fictional person in need would not even be able to get a loan in the first place. Instead, people in these types of situations often go to payday lending companies, get enough money to take care of expenses the same day, and then pay back their loans in full when they get their next pay check.
When the CFPB gets its way, if it does, and makes it almost impossible for payday lenders to provide loans to millions of people (not to mention driving hundreds of payday lending companies out of business entirely) where are these hard working people to turn in these types of emergency situations? There simply are not lots of options available to people who do not have the credit scores or income levels necessary to get loans from traditional banks! This is why so many people are anxious for the federal government to quit trying to “help” them, where these types of financial issues are concerned. The government does have a job to do, but cutting of vital financial access to tens of thousands of people around the country is certainly not a part of that job.