Payday Loan – No

Payday loans are illegal in 15 states and in the District of Columbia. Payday loans are just another way for individuals to spend beyond their means.  The people who have been using payday loans need help increasing their incomes, or help managing their money to avoid falling into the payday loan trap. They definitely do not need to pay fees for the right to use the money they have earned or are about to earn. The payday loan companies are legalized loan sharks.   They get their hooks into someone with a payday advance and then that individual finds it difficult to get out of the loan.  

When a payday advance comes due it is very common the customer will need an advance on the next pay. This process often goes on for several pay cycles until someone helps them brake the cycle or they earn extra money. These loans are being taken by the same people the credit card companies have been abusing with high interest rate credit cards, but they have either maxed out their available credit cards or can no longer obtain a credit card.  

Regulations for credit card issuers have been changing recently, because the difficulties credit card users have in paying back revolving credit. Payday loans turn into a revolving credit account, because of the borrower’s inability to turn over the next paycheck to the payday loan company and go home with nothing to live on for a week or two.

The Payday loan companies were able to sneak around existing banking and usury laws (laws which limit the yearly rate of interest which can be charged).   Many states have now adjusted their laws to address the loopholes these companies were exploiting.  At least 15 states have made this type of loan illegal and Congress has banned payday loans for service members and their families.

We as a society have to consider the effects that the lending industry has on individuals and society as a whole. Housing was an area that it was always thought lending was helping people obtain the American dream, but recent times have shown that lending for home ownership can be taken too far.   Many people owe more than their house is worth and the economy suffered from the collapse of an overblown housing market which was inflated by too easily obtained home loans.