Payday Loans: Helping or Hurting the Less Fortunate
It is no surprise that the payday loan industry has been in the public eye lately. The public is now becoming aware of whether or not payday loan companies are helping or hurting the less fortunate. Some argue that these companies are taking advantage of the less fortunate and creating a cycle of dependency from these loans. Since they can never really repay the loans, the continue to spiral further and further down in debt. On the other hand, others believe that payday lenders are offering people who are unable to take out loans and cash advances a way to relieve themselves temporarily from their financial woes.
States View on Payday Loans
Many states have become more vocal on their opinions surrounding payday loan companies. They have become outraged at how many lenders are taking advantage of the borrowers so they have outlawed the practices all together. Other states have not been so harsh on lending companies. Instead, these states like Washington State, have created laws to protect borrowers so that lenders are unable to take advantage of the borrower throughout the process. Washington State obliges the lending company to create a payback plan for those who cannot payback their payday loan on time. Therefore, when one is serious about taking out a payday loan, he or she should make sure that he or she knows about the laws that are in place regarding payday loans in the state that he or she is taking the loan out in.
Why the Payday Loan Industry Was Created
It is simple. The payday loan industry was created on the honest basis of solving people’s short term financial problems. These companies realized that life is unstable and at any given moment people need money that they just do not have on reserve. Therefore, if someone needed a cash advance that they could pay back as soon as they get paid then this served as a powerful economic tool for everyone. However, there did arrive a time where these companies did realize that they could take advantage of certain people because of their age, economic situation or other factors that would make them likely targets to stay trapped in the cycle of debt.
Payday loans filled in a gap in the financial district that allows people who do not have credit or have maxed out their credit to pay their urgent expenses. Due to the credit crunch and poor economy, creditors have been raising premiums, lowering credit lines and increasing monthly payments and interest. Banks have even retracted credit from their clients. Therefore, payday lending came in very handy for the people who were looked over during this period.
It is true that payday lending can become out of control. This is why it is the responsibility of the person who is taking out the loan to realize if he or she needs a payday loan and is able to pay it back with their next pay check. If not, the cycle of debt will continue and the payday lending industry will continue to have a negative image on society when it can be a rather positive financial tool.
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