Payday loan companies are an industry that should be put out of business. We’ve discussed their unscrupulous operations in several of our previous blogs.
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Governments in Canada and the United States have passed legislations aimed at cracking down on the industry, yet payday lenders continue to operate. In its latest move the Consumer Financial Protection Bureau in the U.S. has proposed new regulations designed to put payday loan companies out of business. The most damaging to the industry is the proposal to limit the number of loans per customer to six per year which is expected to hurt lending volumes and revenue by as much as 75%.
Payday loan companies that have substantial pawn operations are positioned to weather the storm and survive the new U.S. regulations while the smaller payday lenders will most likely disappear from the landscape. Is this better for the consumer? Absolutely! Payday loan companies take advantage of people who are seriously strapped for cash. They see a catchy ad and have no idea that their loan could be costing them almost 600% in annual interest. The consumer gets trapped into borrowing money they can’t hope to repay. A pawnbroker lends money against valuables. If you have something to pawn (typically jewelry), then you can walk away with some cash. At least the consumer isn’t being sucked in a borrowing cycle that will eat him alive.
If you’re considering a payday loan from one of the payday loan companies or a pawn shop, stop! You need professional financial help, not more debt. Contact Ira Smith Trustee & Receiver Inc. today. Starting Over, Starting Now you could be well on the road to financial health.
