People taking payday loans are already troubled by bank over draft fees and are facing serious financial difficulties, their last resort is to take out a payday to get out of their financial emergency.
Los Angeles, CA (Vocus) July 14, 2010
The WTA reports that the board of selectmen, in West Point, Mississippi, are deliberating a proposal, first brought up in early June, to consider banning new payday loans companies in the city. Opponents of the payday lending industry blame, and claim to have linked, payday loans, and other types of high interest loans, to the increase of overdraft fees and bankruptcies within the state. Keep in mind, the payday loan opposition has not provided documented data or evidence for these claims.
A consultant that works with various payday loan lenders, and frequent contributor of a payday loan resource site, says that it’s all rubbish. "People taking payday loans are already troubled by bank over draft fees and are facing serious financial difficulties, their last resort is to take out a payday to get out of their financial emergency."
He goes on to say, "There are plenty of good payday lenders out there, these lenders offer payday loans at low rates and disclose all of the fees associated with the loan. There are payday lenders that charge high fees, these lenders prey on a persons’ financial hardship, but it shouldn’t be a reason to penalize all payday lenders when it’s only a few bad apples."
It appears that Mississippi law allows payday lenders to charge very high fees and one of the highest interest rates in the country, as some payday lenders are offering loans for an annual interest rate of up to 572%. It is important to know that Mississippi also has the most payday loan lenders per capita in the country. In West Point alone, there are about 10 payday loan lenders to serve consumers.
The proponents of payday loans continue to argue that payday loans are not the reason for the financial hardships of the residents of West Point, and they have something to prove it with. According to the Mississippi Economic Policy Center, unemployment and underemployment are to blame for the economical hardships that have lead to financial problems to the residents of West Point, Mississippi. The financial problems cause by unemployment and underemployment are the reason why residents have to take a payday loan in the first place.
The backers of the payday industry claim that payday loans are usually used by politicians as a scapegoat for the financial crisis. They push for payday loan reform just to show the people that they are doing something about the financial crisis. The truth is that they can't really deal with the big Wall Street based banks, so they tend to pick on smaller financial institutions like payday lenders.
# # #