If Payday Lending Ends, What Replaces It?
If Payday Lending Ends, What Replaces It?
Payday lending has been attacked from many quarters because the industry is an easy target in today's media-savvy, soundbite culture. The Consumer Financial Protection Bureau, or CFPB, has been tasked with recommending financial reforms, and despite limits to its powers that include not being empowered to set interest caps on lending rates, the agency has arbitrarily recommended a 36 APR limit. Knowledgeable experts in finance--including those of the major banks--insist that this limit is impractical and unprofitable for companies that want to offer short-term or payday-type loans. If this kind of lending becomes unprofitable or is simply banned, what might …show more content…
It's been revealed that Google owns a payday-type lending organization. Could Google be planning to offer expanded payday loans in an attempt to leverage a bigger part of the lucrative short-term lending market?
Bans of Payday Lending Could Rip in the Fabric of Contemporary Life
WashingtonPost.com reports that the CFPB regulatory proposals would eliminate 80 percent of payday lending in its present form. The payday lending industry developed after states deregulated interest rates and has grown into an $89 billion industry. When an industry is that lucrative, it's easy to see why payday loan offices have become more common than McDonald's franchises. Many people have come to depend on this source of emergency cash, and taking away the supplier won't curb the need. Almost all the alternatives to payday lending would necessarily concentrate on longer repayment periods and greater lending restrictions based on each borrower's credit score, so disenfranchised people will face the same problems securing these loans as they would getting credit from traditional loan …show more content…
Without access to emergency funds, people might choose riskier financing alternatives, or traditional lenders might start financing short-term installment loans. Payday lenders will be forced to consider alternative financial products that are financed over longer repayment periods to make their lending activities more profitable, which opens possibilities for encroaching on the financial services that banks, credit unions and savings and loan associations offer their customers. The real-world results will probably include retooling of payday loans, greater participation in short-term lending by traditional finance companies, increased pawnshop lending and more loans offered by organized crime in communities throughout the country. Find out more about payday lending and its alternatives at the
If Payday Lending Ends, What Replaces It?
Payday lending has been attacked from many quarters because the industry is an easy target in today's media-savvy, soundbite culture. The Consumer Financial Protection Bureau, or CFPB, has been tasked with recommending financial reforms, and despite limits to its powers that include not being empowered to set interest caps on lending rates, the agency has arbitrarily recommended a 36 APR limit. Knowledgeable experts in finance--including those of the major banks--insist that this limit is impractical and unprofitable for companies that want to offer short-term or payday-type loans. If this kind of lending becomes unprofitable or is simply banned, what might …show more content…
It's been revealed that Google owns a payday-type lending organization. Could Google be planning to offer expanded payday loans in an attempt to leverage a bigger part of the lucrative short-term lending market?
Bans of Payday Lending Could Rip in the Fabric of Contemporary Life
WashingtonPost.com reports that the CFPB regulatory proposals would eliminate 80 percent of payday lending in its present form. The payday lending industry developed after states deregulated interest rates and has grown into an $89 billion industry. When an industry is that lucrative, it's easy to see why payday loan offices have become more common than McDonald's franchises. Many people have come to depend on this source of emergency cash, and taking away the supplier won't curb the need. Almost all the alternatives to payday lending would necessarily concentrate on longer repayment periods and greater lending restrictions based on each borrower's credit score, so disenfranchised people will face the same problems securing these loans as they would getting credit from traditional loan …show more content…
Without access to emergency funds, people might choose riskier financing alternatives, or traditional lenders might start financing short-term installment loans. Payday lenders will be forced to consider alternative financial products that are financed over longer repayment periods to make their lending activities more profitable, which opens possibilities for encroaching on the financial services that banks, credit unions and savings and loan associations offer their customers. The real-world results will probably include retooling of payday loans, greater participation in short-term lending by traditional finance companies, increased pawnshop lending and more loans offered by organized crime in communities throughout the country. Find out more about payday lending and its alternatives at the