Will New Payday Lending Regulations Actually Help American Consumers

There are plenty of people out there who need to take out smaller dollar loans to get by. Other than payday lending companies, however, these folks often don’t have much choice. You see, the big banks would much rather make a loan to someone for $75,000 instead of making loans for a few hundred dollars. Add to that the fact that banks require people to have strong credit scores in order to get approved for a loan, and it is easy to understand why so many Americans turn to payday lenders and other short term lending companies when they need to get access to fast cash loans. Some would say that quick fixes are never a good thing, but the quick fixes payday lenders provide to lower income households can prove to be financial lifesavers. And while it may seem troublesome that so many Americans have to continually take out small dollar loans to get by, this is not the fault of the lenders. It is, however, the fault of more serious financial issues that lead to such circumstances in the first place.

Here’s an example of how someone might find themselves in need of a payday loan. Let’s picture a young couple who do not make a lot of money. They find that one of their children has been diagnosed with a serious health condition, and one of the parents has to stop working. This means that the couple is already making less than they already were, and have new bills to pay too. Their only means of getting the child to doctor’s appointments is via the family car. But the car breaks down and it will cost $500 to fix it. Without a large savings fund, and with a limited pay check, the family must get the car fixed in order to continue on with life and to help their child with healthcare needs. So, the family takes out a payday loan to get money to fix the family car.

This story may not sound all that dramatic; after all $500 is not a lot of money to some of us. However, for the family that needs to take out the payday loans, it is very serious indeed. However, it is not the lender that has caused this problem. The lower paying jobs that these folks work at, along with ever increasing prices for everyday items, like groceries and gasoline, along with a dozen other financial issues have all combined to leave this family in a situation where they rely on the assistance of payday lenders.

Now, with these types of situations in mind – what would this family do if they did not have the ability to take out payday loans for these types of financial needs? They would be in an even worse situation than they already are. Yet, the CFPB is doing all they can, by way of new, stricter regulations that will likely put many short term lenders out of business, to create a worse financial reality for the people they are supposed to be protecting.

To make a long story short, those in charge of protecting the financial stability of lower income families need to put more focus on the forces that combine to make families need to regularly take out payday loans and stop trying to put the very lenders who actually do help these consumers out of business. It’s easy to blame lenders who are making a profit, but regulations that may kill off the short term lending industry are bound to do much more harm than good!


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