Bonnie Schoenberg wrote this story in today’s Daily Herald. I think her point is that more options are better than fewer options. You can get rid of payday lenders, but that would just benifit banks and credit card companies. The demand doesn’t go away.
The payday issue is so polarized that people are failing to recongnize what’s going on in Illinois. Today, there is a loan that allows a cash advance that’s regulated by the state. It’s called PLRA (Payday Loan Reform Act). So there is an option for someone who wants a cash advance until their payday. The problem is that this is not enough and borrowers want more.
The PLRA law was supported by the large national payday lenders and was able to pass through the Illinois legislature. Unfortunately, many smaller lenders didn’t think they could make money under this law and didn’t want to deal with the state auditing body and their penchant for interpreting law and fining lenders. These lenders went to 121 day installment loans because it was easier and they could compete against larger payday lenders that are much better capitalized and can handle a large downturn in fees.
One the large lenders that supported PLRA saw that they could not compete with other lenders, they followed suit and waffled on their promise to offer only payday loans.
Here is what the general public does not realize. There is a huge demand for money. There is a loan product out there for people that need a cash advance. The reality is that borrowers are not running to this product because it limits their ability to get a loan.
What most people don’t understand is that a dollar today is worth more than a dollar tomorrow. How much more? It depends on who you are and what your history is of paying people back.
The reality is that Senator Durbin in his attempt to cap rates at 36% is locking people out of the credit markets. Until a bank or credit card company decides to give these people money, they basically SOL. You don’t promote responsible borrowing by locking people out of the credit markets.
We could eliminate a lot of things in this country that we personally do not use or like. I hate going here, but I’m going to anyway. There is another place where the government makes decisions for you. It’s called China. It’s a nice place to visit but I wouldn’t want to live there.
I just don’t understand why people that think or know these loans are bad for them can not just say “NO” and let everyone else make their own decision?
