Struggle With Payday Lenders - Is It Fair

May 18, 2010 - PRLog -- Payday lenders are rising for struggle with newly imposed financial restrictions. Nowadays fast loan industry is very rapidly developing and a great number of faxless loan providers represent a strong opposition to new legislation.
New payday loan legislation
The aim of the newly imposed lows is the creation of specialized independent customer protection agency having broad powers. The fact is that payday lenders are already regulated by the state and furthermore they don’t take any money from federal budgets. Due to this, many journalists wonder why the short term lenders are treated in such a strict way.
Arguments for payday lenders
Another powerful defender of payday lenders is a Washington lobbyist Wright Andrews and his wife, who both do all their best to prevent legislators form their efforts to crack down the payday lending http://paydaylending.blog.com/ industry. Being a partner of lobbying company Butera & Andrews, Mr. Andrews has been making documents and papers defending the reputation and interests of both payday lenders groups and separate fast loan providers. According to Wright Andrews ,his activity is performed on behalf of payday loan industry but he has provided no details.
Arguments against payday lenders
So why are legislators treating the fast loan providers so rudely? They claim to very high percentage rates the lenders demand for their services. Fundamentally, they are right. Most payday loan lenders take 15% from every $100 lent. In some cases the rates reach even 25%. At the same time the short term payday loans online http://ameriloansearch.com/short-term-payday-loans/short-... are granted for a very short period of time, usually for two-four weeks, so as the result these loans turn to be not so expensive, as they seem from the first sight. In any case even most customers consider fast loans to be more helpful than expensive.

The payday lenders themselves explain the high rates they set by the high risk they take. The instant faxless loans http://samedaypaydayloan2009.blogspot.com/2010/01/instant... provide no pledge so the deal is based on the trust. The lenders really take high risks as they provide loans almost to anyone with only a few restrictions. In most cases the loan providers require no verifying documents to be sent by fax, they are satisfied with the information the customer states in the online application.

However the legislators have their arguments as well. Due to economic recession the financial state of most customers leaves much to be desired, so very often they are unable to pay off the loan at the end of the period. What shall they do? Ask for loan prolongation, of course. And this is where the mathematics plays against the direct payday lenders, as annualised interest rates reache 400% or even more. Of course this is unacceptable, not only for legislators but for customers in the first turn. Many clients of payday loan companies get into the debt trap.

However it is also necessary to take into account that with the beginning of financial crisis most traditional lenders stopped granting the loans, so the customers had to turn to no teletrack payday lenders.

However many spokesmen take a rigid position regarding payday companies. According to Cathleen Day, due to fast loans many customers just get into a debt treadmill and receive even more serious financial problems.

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