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Quick Payday Loans: Down on the Upside

[Oct 15, 2009.]


Every action has an equal and opposite reaction. This challenging economy is absolute proof. After decades of reckless spending, banks are being forced to curb traditional lending in ways never seen before. Quick payday loans could be seen as a microcosm of the economy in general. Here are the trends that may affect borrowers.

Payday Loan Opportunities Take a Hit Nationwide
250 here one minute--zero the next. That’s what’s happened to the number of payday loan lenders in Arkansas in the past year. And the trend seems to be catching on. The Wallet Pop blog reveals new legislation in Arkansas aimed at limiting the availability of quick payday loans by way of a cap on interest rates. While quick payday loan opponents cheer this recent legislation as the demise of the industry in the state, many consumers fear losing another option for handling financial emergencies.

Many states appear to be following Arkansas’ lead in passing their own anti-usury lending legislation. Other state actions of note include:

  • Arizona will cap rates in 2010

  • Texas to set rate limits at 156 percent

  • Missouri to set rate limits at 1,955 percent

  • Delaware, Idaho, Nevada, South Dakota, Utah and Wisconsin have no cap rates

Overdrawing Better Than Quick Payday Loans? Nope.
Michael Covel’s The Trend-following Manifesto blog reveals the true nature of payday loans in relation to your average big bank. Covel presents the dilemma--you don’t have $100 to buy groceries. Do you access a payday loan or do you overdraw on a bank account and pay their fees? According to his calculations, overdrawing on a bank account would cost more than quick payday loans. In fact, there is almost a 300 percent difference in annual percentage rates between the two.

So it begs the question: why would states be looking to run payday lenders out of business when big banks do much more harm? This seemingly inverted approach to finance may be what got the country into this economic mess in the first place--limiting options for consumers in order to promote the interests of traditional lending. It seems that more options, not less, is what will get us through tough times.

If you’re looking for personal debt solutions or guidance in evaluating quick payday loans, see what Rebuild.org has to offer. We offer advanced service matching technology that can help you receive the best rates or terms available. The process is data secure and wholly private.


About Author:

Kelly Richardson is a freelance writer, marcomm consultant and digital entrepreneur. He’s written content for Fortune 500s Google, Yahoo!, Microsoft and Wells Fargo. Find out more about him at kellyrichardsoncopywriting.com.

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