10260485-fast-payday-loans-guaranteedSome people and organizations out there want to get rid of payday lending companies altogether. These critics consider short term, small dollar loans to be predatory. Other folks simply consider payday loans to be yet another financial product available to provide people with a line of credit. Payday loans can get passionate responses from both sides of the fence, but no matter how you slice it, people should have the right to take out these types of loans in a free society that is based upon capitalism, like ours.

Payday loans were originally created to provide a less stringent financial alternative to help people who are having immediate financial issues, need fast access to money, and may not have access to lending services from mainstream banks and credit companies. People routinely use these types of loans to take care of expenses when they simply don’t have enough money in the bank or on hand to deal with pressing, perhaps unforeseen expenses. The majority of payday lending companies require their customers to have steady income, bank accounts and to be at least 21 years of age. Payday lenders even routinely skip on using Social Security numbers when processing loans. Why is it, then, that so many people are opposed to the payday lending industry?

People who are up on their soapboxes with regards to payday loans often cite that these loans force borrowers to pay very high interest rates and that the loans themselves are just plain predatory in nature. The Consumer Financial Protection Bureau released a report in 2014 that stated that 58 percent of all payday loan customers receive government assistance. This fact would almost lead someone to believe that payday loans add to the financial difficulties that these people face, if it weren’t for the other facts that are not being taken into consideration.

unsecured-debt-consolidationWhat these payday loan opponents are not bringing to the table, however, is the fact that people have a very difficult time getting approved for loans. Loan approvals are not only complicated for people with bad credit scores and lower incomes, but they are even hard to get for people who are flush with cash and who have higher credit ratings. The banks have increased the stringency of their approval processes and they have prevented millions of people from getting loans, and made it difficult, at best, for millions of other borrowers. In a nutshell, this increased scrutiny on the part of mainstream lenders has made getting access to emergency cash an impossibility for millions of unbanked and underbanked households in the United States.

Our economy, at its most basic level, is built on the philosophy of supply and demand. In a free market, businesses are created to help fill the demand of customers. Since the late 1990s, the use of payday lenders has increased over 500 percent. This industry now brings in about $50 billion annually. Of course, this just goes to show that the demand is there. Why is it, then, that there are so many government watchdog groups that are hell bent on getting rid of the companies that supply a service to so many people? And doing so under the guise of protecting consumers to boot??

The people who take out payday loans are not doing so blindly. The lenders are not using predatory lending practices. At the end of the day, people need access to money for emergency expenses. If they cannot get this access via mainstream banks, then they need alternatives. The CFPB and federal government simply have no business making it more difficult for these consumers to get access to lines of credit when they need them the most.

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