The Issue of Payday Loans - 1840 Words

One cold morning Sam Black woke up with aching chest pain. Troubled by this new condition he went to see his Heart Doctor. Little did Sam know that hours later he would be lying on the operating table in route for a triple bypass surgery. The surgery went as planned, but it was not the last of them. Sam was sent to many specialists and rehabilitation centers, building a large bill, which they had no money to pay them with. He still pays several grand a year for the medication he is prescribed. Years after the operation Sam and his wife, Elsie, have narrowly escaped foreclose, however the most problematic debt they have is the hundreds of small term loans with interest rates in the triple digits. Elsie once said in an interview regarding†¦show more content†¦These companies were highly concentrated in the south due to loose regulation practices and began to travel west. Now it is a massive industry that ranges from small businesses to large corporations. At the top of this in dustry is Advance America, a national chain that made 4 billion dollars off the interest on roughly 400-dollar loans (Wright, 2011). This seemingly helpful practice has been the victim of a lot of scrutiny as of late. This has caused a shift in the regulations among these companies. Regulations are state mandated and done so according to the demographic region of the company. Since the regulation occurs at state level. That said the states that do permit these loans regulate the many aspects of the loan, avoiding mistreatment of the borrowers. In most states the borrower must make at least 1,000 dollars (full-time at minimum wage) and be employed by the same employer for a consecutive 3 months. This ensures that the borrower has a source of income and can pay back their loans. As a result of some states not permitting this type of loan, many people find themselves driving across state lines in order to receive a loan. State regulations do provide support, but the negative effects of lending companies are increasing. Debt is among the greatest challenges we face today, personally and as a country. More and more people are falling into this growing problem. Payday loan companies exploit this problem. Even though the loan amounts are relatively low, theShow MoreRelatedThe And Online Payday Loans1223 Words   |  5 Pagesand online payday loans decreased 23 percent in 2016, according to information released by the Center for Financial Services Innovation, also known as CFSI. Some of the decline is due to payday loan borrowers shifting to bad credit installment loans or other subprime credit products. However, the CFSI study also revealed some alarming statistics that indicate that financially underserved Americans are incurring substantial fees for products other than a payday loan or cash advance loan. What Is BehindRead MorePredatory Lenders And Its Effects On Lower Income Areas1444 Words   |  6 Pageswhich offer loans with high interest rates to those who are in need of fast money, usually for an emergency. Originally, predatory lenders operated as loan sharks, but now they operate as payday loan offices, and car tile loaners, having found a niche market, of people who are both desperate for quick cash and have stable paying jobs, and are willing to accept paying flat fees subtracted from their loan total in exchange for quick cash. Loans such as Payday Loans and Car title loans operate by preyingRead MoreShould Online Payday Lending Be Regulated?819 Words   |  4 PagesShould Online Payday Lending Be More Closely Regulated? Should Online Payday Lending Be More Closely Regulated? Payday loans generate lots of controversy because they re offered to people who have bad credit or limited credit histories, which makes them high-risk borrowers. Traditional lenders seldom approve loans for these types of borrowers and never quickly enough when a cash emergency occurs. Unfortunately, many of these same people don t use payday loans as intended -- as short-term emergencyRead MorePayday Lending : Unique Opportunities Essay752 Words   |  4 PagesPayday Lending: Unique Opportunities to Both Sides Nowadays it s very easy to come across some sort of payday loan advertisement. Whether you re watching television, reading an online article, listening to the radio, or driving to the grocery store – payday loans are everywhere. They offer fast money for those times when you need it most and often don t check your credit history. However, they do have high interest rates which means you may end up paying more than you initially borrowed. It sRead MoreInternational Journal Of Social Welfare1285 Words   |  6 Pagesof Analysis Cash Converter, the biggest payday lender in Australia has been charging interest rates as high as 633 percent per annum to its customers even though the government has made a comprehensive cap of 48 percent. This has raised ethical issues against Cash Converters as many needy and vulnerable has become a victim to their exploitation. We discuss how the practices of cash converters affect the poor borrowers and why it has become an ethical issue that requires more attention from the governmentRead MoreThe Payday Loan Information System1607 Words   |  7 PagesAs soon as the information for the project was given to us, as a group, we took the initiative to gather the information as soon as possible. The play we went to gather our payday loan information was from Approved Money Center that is located on 700 S 14th Street, Suite B Kingsville, Texas 78363. The number to Approved Money Center is (361) 592-8300 and we spoke with Courtney Candelara, Associate, who has been working there fo r a year. This is her first time working at this type of business. SheRead MoreInstallment Loans : Let The States Decide Essay964 Words   |  4 PagesInstallment Loans - Let the States Decide Installment Loans - Let the States Decide Called by different terms that include marketplace loans, nonbank loans, shorter term lending and Internet-based loans, installment loans work differently than most payday and short-term loans such as auto title loans. These loans allow consumers -- and a significant number of small businesses -- to borrow amounts that range from $200 up to $5,000 and repay them in equal installments over a longer repayment periodRead MoreDeregulation And The Rebirth Of An Industry1564 Words   |  7 PagesI. Deregulation and the Rebirth of an Industry Before the 1980s you couldn’t find many payday lenders, if a person was short on cash and needed it immediately they had to go their local pawn shop, or if incredibly desperate a loan shark. The pawn shop provided a pay-it-back or lose it system which left people without their personal effects, but they were free from debt. The loan shark on the other hand charged extremely-high interest rates, and usually under illegal conditions. Both of these optionsRead MorePayday Loan Bans : What Happens When They Are Made Into Law916 Words   |  4 PagesPayday Loan Bans - What Happens When They Are Made into Law Payday Loan Bans - What Happens When They Are Made into Law What will really happen if payday loans are banned? The consequences could prove wide-ranging and affect multiple stakeholders in the world s increasingly fragile economy. An article posted on the WashingtonPost.com conjectured that the United States would become a wonderful garden without all the tacky neon signs for payday loans that are common in most reas of the country. TheRead MoreCycle Of Loans : The Loan Industry Essay872 Words   |  4 Pagesâ€Æ' Cycle of Loans The payday loan industry operates with fees, and relies on repeat business from their customers. Once someone receives a payday loan, they become harder to pay off. For example, assume Bob makes $400 dollars a week, and his weekly expenses are 350 dollars a week, but he needs to pay $200 dollars to fix his car. Bob obtains a payday loan for $300 dollars, which was the smallest amount, and receives $255 dollars to pay for his car repairs. Now come Bob s next payday, he only gets