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Some rich payday lenders and companies are forging a huge amount in a bid to try to get more respect from Washington. They are trying to shed the name “payday lenders”. They want to be called “Short-Term Loan Lenders.”

To quote from the Bloomberg article:

Firms offering short-term online loans, including Fort Worth, Texas-based Cash America International Inc. (CSH), are ramping up political contributions, hiring lobbyists and asking Congress to largely transfer oversight from states to the U.S. Office of the Comptroller of the Currency. A House committee today will hold a hearing on the proposal, which the OCC itself opposes.

As the $11 billion online loan industry bulks up in Washington, it also aims to shed the “payday lenders” label, according to talking points drafted by Peter Barden, a spokesman for the Online Lenders Alliance.

More information can be found here.

We have some pointers as to why these cash-rich companies want a change in their name.

Payday lending has a bad reputation in the business industry. Everyone right from the legislators to the common man looks at this business as a necessary evil for people who don’t have access to credit. In fact, the criticism of the term payday lending has made some lenders avoid the term completely.

Other than short-term loans, some of the lenders prefer to call these loans “direct deposit advances”, “checking account advances”, “signature loans”, “unsecured loans” etc.

When the purpose is emergency cash requirement, a payday loan does help. But it becomes a bigger problem when the borrower is unable to pay back the loan.

Since a lot of people are unable to pay back the loan, they fall into a debt trap never to come back again. These people tell their stories to people they know, write them online, twit them on twitter or Facebook etc. These stories get popularized. Hence the industry gets a bad name.

Whatever the case may be, the industry has got a bad name.

We think it’s a step to kind of re-brand the whole industry. If people stop saying “payday loans” and start saying “short-term loans” it gives an image makeover to the whole industry. And who knows it will get a better image than it has now.

Another reason is by name itself “payday loan” does not mean anything. A short-term loan defines the real purpose of the loan and the business itself. It makes sense and reminds the person who has taken a loan that it’s meant for the short term only and that it needs to be paid back in a short period.

Some interesting facts: The payday industry is known to contribute millions of dollars during elections and help the legislatures win elections. They play a huge role in the presidential elections as well. Moreover, they have their own pressure groups and insiders in the government who support them if they want something from the lawmakers. And more often than not they get it.

It will be interesting to see if the payday lenders are able to pass this proposal.

The new payday loan database of the US state of Alabama reveals that citizens in the state took this short-term loan more than two million times in the last year. Further, it was revealed that Alabamians took an average of eight loans in 2015. Also, the value of an average loan in the state last year was $326, while the average loan term was for 19.6 days. About a one-quarter million individuals have taken these loans in the state.

This data would surely surprise a lot of people, as the popular belief is that, a payday loan is on the wane because of the strict restrictions imposed by the federal government and many states. Google too, recently imposed a ban on all payday loan advertising on both its search and display networks.

Quick Cash Loans Popular in Alabama

However, this data makes it clear that such cash advances remain popular in the state, and in fact, could actually be growing. Alabamians value the services offered and would approach these businesses for their cash needs, often preferring them over banks and other lending agencies.

In fact, payday loan businesses have been saying for a while now that the cash advances they make remain popular in many US states, in spite of the many federal and state restrictions that have been imposed, as a lot of people have an urgent cash requirement that will help them solve a sudden emergency.

Conventional banking and lending systems are not able to help them with the current systems. They are simply not viable alternatives. If there were practical alternatives, then there couldn’t have been so many repeat loan usages in Alabama.

The Alabama State Banking Department Disclosure

A presentation was made to the Alabama Consumer Credit Task Force members by the Alabama State Banking Department recently, where they revealed the state’s payday database. This database was created recently for tracking payday lending in the state. Many other states in the US have created similar databases.

The task force recommends changes to the state’s consumer credit laws, and this includes laws governing payday loans as well.

The revelation disclosed that people in Alabama took payday loans 2.1 million times since the database was started in August 2015. 246,824 borrowers in the state approached lending agencies for money. The figure would surely have been much higher if the group had started creating this database earlier.

Consumer advocates are saying that this shows payday loans remain extremely popular in the state. Critics have said that Alabama must do more for protecting consumer interest. However, others disagree, saying that the present restrictions are adequate. Any further restriction could kill the industry, thereby denying people the money they need in an emergency. It could turn out to be a very serious issue if they don’t have the funds they need. For instance, many more people might have no other option but to file for bankruptcy. That won’t be good for the state’s economy.

The state’s payday industry spokesman pointed out that the number of businesses offering these quick cash loans have already fallen from last year’s 1,100 to 747 now. It will definitely go down further if the state decides to impose more restrictions.

Payday Loans Extremely Popular in the State

Analysts are saying that since people took an average of 8 payday loans in 2015, it shows that they are using the money not just in an emergency, but to pay for recurring expenses as well. You don’t have to disclose why you need the money with payday lending. There is no credit check as well. There is very little paperwork. So the cash advance can be issued quickly, often within two to three business days.

This also shows that Alabamians are paying back the loan quickly as well because they wouldn’t have a second loan if the money was still due. Critics have been saying that payday loans cause debt traps. But, the Alabama data proves that there is no such thing in the state. And so, there is no case for imposing further restrictions.

Most Alabamians seem to be comfortable with the flat fees and interest rates charged. The two-week loan duration is comfortable too, as there is no long-term debt burden.

Why Are Alabamians Taking So Many Payday Loans?

A member of the task force, Max Wood, feels that there is no other way people in the state can get loans as little as $300 so quickly. “It’s almost like walking into the room and walking away with the money. So simple”, he says.

After a court ruling last year, Alabama imposed a $500 cap on a one-time payday loan. The average value of the loan dropped to $326, and the number of lenders dropped too. The database project was started after this.

Many in the state are scared of approaching the banks because if they cannot repay and the check bounces, then the overdraft fees are higher than what payday lenders charge.

The fact that so many Alabamians are seeking a quick loan doesn’t necessarily mean that the state’s economy is in poor shape. According to the results of a recent survey, 47 percent people in the US will have problems coming up with just $400 in a sudden emergency.

Lenders in Alabama Want to Protect Consumer Interest

Lending agencies in the state are obviously happy that so many people are asking for quick cash loans. But a spokesman for the industry said that it’s not just about the loans. “We want to make them consumer-friendly too”. Lending businesses are looking at consumer interests in the state.

“We’ve got to make sure consumers are protected. I want our companies to make a reasonable profit. They have to. They can’t stay in business if they don’t, but we have to protect the consumers as well”, the spokesperson added. The industry as a whole suffers if people go into a debt trap and are unable to repay the loan amount.

The Alabama House Committee met a few months back and passed legislation to lower the fees on payday loans. The term of the loan was also increased from 10 days to between 28 and 45 days. Perhaps these are also some of the reasons that spurred the growth of the industry.

The state’s payday loan industry is OK with all these regulations. Almost all the businesses are ethical and they want to follow all government laws. The 747 licensed payday lending companies are offering good value and a high level of service to people in the state. Tighter restrictions won’t be good for anyone.

This happens to all of us – the car breaks down, a sudden medical crisis, unexpected bills to pay, the kid declares she simply must have that new toy for her birthday… and you are a bit short of cash. You cannot wait till the end of the month, the payday. You need money here and now. So what do you do?

According to the findings of a Bankrate poll, more than 50% of Americans don’t have enough emergency savings that can cover even a minor cash need, as little as $500. The poll disclosed that just about 38% Americans had enough cash they could access easily in an emergency.

So where do you turn to if you require cash to cover an emergency? Thankfully, there are some ways to get the money quickly, even if you don’t have it at this time.

You can always take a loan to raise the money you need. This will always be an option, but deciding to walk this path, first see whether you can raise the cash in any other way. Here are some quick ways you can raise cash in an emergency.

1. Sell Your Stuff Online

You can fetch a lot of money by selling big items that you may not need, such as the bike or furniture you can do without. You may also sell books that you have read already, clothes and gadgets. Try Usell.com for electronics. The website doesn’t charge anything from buyers or sellers. You can get between $100-140 for a used iPhone 4. Visit sellercentral.amazon.com to sell books and DVDs, and Cardpool.com for gift cards. The website mails you a check within 24 hours after you have sent your card electronically.

Thredup.com is a good place to sell kids clothes. You will get 40% of the resale value of the item you sold. Did you know that you can even sell your hair at hairclassifieds.com? You can get anything between $200 and $500 for 10 inches of hair if it is not died.

2. Garage Sale

Of course, you can also sell your stuff offline, by organizing a garage sale. Offer anything you don’t need, because you never know what your neighbors might find handy. Organizing everything can be hard work, but you can make a decent amount of money from the sale. According to a poll done by YardSaleSearch.com, an average garage sale can fetch between $100 and $200.

3. Give It Away On Rent

Don’t want to sell it? Why not rent your stuff to raise the money you need? For instance, you can rent your home at these two websites – homeaway.com and airbnb.com. You will easily be able to make $60 for each night, minus the small commission they will charge. Of course, the prospects are better for those who are staying at vacation hotspots.

You can also give away your car on rent. Try turo.com/. This works best in cities and college towns where a lot of the residents don’t own cars. But it would be wise to look at your insurance policy first before renting out the car, because some policies do not allow renting, and an accident may not be covered.

You may even give away your car parking space on rent. You can easily do that if you currently have prime parking real estate. You can park your car further away and walk down to your home. You will get more exercise and make some extra money. Perhaps you will drive less too if your car is not that easily accessible, and you will end up saving money on gas as well.

4. Do Odd Jobs

Just a single source of income is always risky. What happens if your employer falls on bad times or technology changes makes your job redundant? These things happen all the time. So it’s wise to have a second income stream. Be on the lookout for one. There are many opportunities that may give you decent money every month.

For instance, you can start a dog-walking service in your neighborhood. According to Care.com statistics, dog walkers usually make between $10 and $25 for every dog they walk each day. Pet sitting is another option, which will give you $16 for each visit. You may baby sit for friends or your neighbors as well. A babysitter can make $9.85 every hour according to PayScale.

Don’t worry if you are allergic to dogs and are not comfortable with babies. You still have other options, like washing cars or mowing the grass. You can also paint the fence, or do grocery shopping for busy people. One other option is to start a walking tour in your city or neighborhood. This will work if you are presently staying at an interesting place. You may start a blog as well, but this will take some time to give you money.

You will find many available jobs at websites like TaskRabbit and others like this. You need little to no experience for many of the jobs that are available at these places.

5. Return Things You Are Not Using

We all have things at home that we have never used. Perhaps a sweater you received as a gift last Christmas! Or may be a cutlery set that is still in wraps! Many people buy on impulse, only to realize later that they never really required the item. So it remains unused. You can return these things if they are still unused. L.L. Bean and Kohl’s both take back any item. There are others too. Many retailers also keep electronic receipts so you will be able to return the item even if you don’t have the paper copy any more.

6. Borrow Money from Family or Friends

This is a quick fix, but this should always be your last resort if nothing works. Most people don’t like to lend money and approaching them can be embarrassing as well. Your relationship can get strained easily if someone close lends you money according to many psychologists. An unpaid loan will also lead to a bad feeling. So think twice before doing so.

7. Take a Payday Loan

You don’t have to sell your stuff, or approach friends and relatives for money if you can take a payday loan. The lender will give you the cash you need till your next payday. On this day, you will have to repay the loan amount, plus the interest and fees. Payday loans, which are also referred to as “cash advance loans” sometimes, are typically issued for another 2 weeks and for amounts between $300 and $1500. You will end up paying back just a few dollars more because of its short duration and the low amount of lending, even though the interest rate is higher than a conventional loan.

You can take a payday loan without collateral. You will just have to submit accurate information like your name, email and physical address, phone number, social security number, bank account details, and the total money you are making each month.

Loan applications are approved almost always. There is rarely a rejection. More importantly, your application for a payday loan will be processed and the money will be deposited directly into your bank account very quickly, which is exactly what you need in an emergency. Typically, it takes between 24-48 hours.

According to data with the Consumer Financial Protection Bureau (CFPB), more than 10 million Americans took payday loans in 2016. That figure is likely to be more in 2017 and further, with an estimated 20 million people in the country wanting the loan. The data also shows that not just the poor, a wide section of the population from around the country are approaching the payday lenders for a loan when they need money. In fact, many of these people even take multiple loans in a year.

These figures show clearly how popular payday loans have become in the United States, irrespective of the fact that there are now many restrictions because many critics want to make us believe that these loans are predatory. Clearly, the consumers don’t think this way and find the loans most useful in times of need.

You can apply for a payday loan here.

We all face an unexpected situation from time to time, and in these times, it’s often money that we need above everything else to solve the emergency. However, it is difficult to meet the emergency expense if you don’t have enough money in the bank, which many people don’t. So many of them ask for credit!

However, the problem is, it takes several weeks for the banks and conventional lenders to offer the money because of their lengthy processing time. In an emergency, you need the money really quick. Thankfully, there are lenders, such as payday lending companies that are able to meet this gap. You could receive the money in less than 48 hours.

Apart from payday loans, there is also the ‘car title loan’ where you can get the money you need relatively quickly. So what are these loans, and which option should you choose in an emergency? Which of these loans will be better for you?

According to a 2015 report brought out by the Pew Charitable Trusts, about 5% of adult Americans take payday loans for a variety of reasons like paying their bills, carrying out urgent repairs of their cars, or to buy medicines. Compared to this, only about 1% takes auto title loans, which comes to slightly more than 2 million people. So clearly payday loans are more popular in the United States, even after all the federal and state restrictions that have been imposed on the lending in recent times.

What Is an Auto Title Loan and How Does It Work

An auto title loan is a secured loan where the equity of your automobile is held as collateral for the money offered to you as the loan. In other words, you will have to hand over the title of your car to the lender to get the loan. You can continue to drive your automobile, but the lending company will place a lien on the registration of your vehicle as security. If you are unable to repay the loan, the lender has the right to take your car.

You can borrow anything between $2,000 to $50,000 in an auto title loan, depending on the state of your residence, and the equity amount in your vehicle. You can put up your car, truck, motorcycle, RVs, and others as collateral. Before issuing the loan, the lending company will first appraise the value of your vehicle to determine a percentage of the value that can be issued to you as the loan. Usually you get between 25% and 50%.

Payday Loans

These loans, on the other hand, are issued against the pay you are scheduled to receive next month. There is no collateral, and so a payday loan is deemed to be unsecured debt. These are small dollar loans where the money is issued usually for 2 weeks or less. You are expected to pay back the amount borrowed, plus the fee and the interest on the day you receive the next paycheck. This is why these loans are referred to as ‘payday loans’.

You can apply online or by visiting the store of a lender. To apply, you have to submit some basic information. The application is processed quickly and the money is deposited into your bank account usually within 2 to 3 business days. Rejections are rare, which means that, the loan is approved almost always.

If you cannot pay back on time for some reason, then you can request the payday lender for an extension of your loan. You will be given a new date, and asked to write a second post-dated check. A new fee is also likely to be charged from you. However, a high percentage of people are always able to pay back their payday loans on time because the amount involved here is less, usually between $300 and $1500.

Comparing Auto Title Loans and Payday Loans

The Loan Duration

The term of an auto title loan is usually between 12 and 36 months.
The payday loan term is till your next payday. So it could be anything between 1 day and 29 days. However, it is usually around a couple of weeks.

Amount of Money

How much you can get from an auto title loan depends on the value of your vehicle at the time when you are applying for the loan. Usually you can get anything between 25% and 50%.
Payday loans are normally issued between $300 and $1500. Rarely will you get a loan more than this.

The Interest Rate

In an auto title loan, the APR (Annual Percentage Rate) is 300%, according to the Federal Trade Commission.
The Consumer Financial Protection Bureau (CFPB) says that the average APR for payday loans is around 400%, which is significantly more than auto title loans. Sometimes, the APR can be even higher. However, for all practical reasons, you will end up paying much less because the loan term is for just about 2 weeks. The amount involved is also less. So it never actually pinches you that much.

For instance, if you have taken a payday loan for $100 and have to repay after 10 days, then the outstanding amount on your payday will be $120. The APR here is a staggering 730%, but you still end up paying back just $20 more. With personal loans and auto title loans, on the other hand, you end up paying back much more, for two reasons – you have to repay over a long time, and second, the amount you borrowed is much more.

Sometimes, title loans can be for as much as $10,000, or more.

Study Finds Payday Loans to Be Better Than Auto Title Loans

According to the findings of a new study that was carried out by the Pew Charitable Trusts, payday lending in the United States is better than auto title loans. The report says, the auto title loan market is “plagued by problems, which includes excessive prices, and un-affordable payments.

Director of the small-dollar loans project of Pew Nick Bourke had this to say, “We found that auto title loans require balloon payments that borrowers can’t afford and most customers end up having to re-borrow the loans repeatedly”.

In fact, Pew found that the average customer of auto title loans often end up paying more towards the fees than the amount borrowed. Pew Charitable Trusts also comments in their report that the amount due for consumers is often more than 50% of their monthly income, and as a result, they are left with no other option but to renew the loan, often, month after month. Half the people Pew Charitable Trusts surveyed said that they took the loan so they could pay their regular bills.

Presently, auto title loans can be offered in 25 states. According to the estimates of Pew, more than two million people in the United States take these loans every year presently, and this generates $3 billion in revenue approximately.

The Report Published By Newsweek

The finding of Pew Charitable Trusts is not the only report. For instance, Newsweek recently published a report (on July 29th), according to which, payday lending industry in the US is extremely regulated, which is in contrast to what the critics are saying. The report arrived at this conclusion after examining state-level and federal regulations that are already in place, and also the jurisdictions at the municipal levels.

Critics have been slamming payday loans for quite some time now, and have been asking legislatives to impose more restrictions. However, according to the findings, as published by Newsweek, a highly respectable journal, there are adequate restrictions in place already in the United States, at the federal, state, and municipal levels. So nothing more is needed at this time.

The payday lending industry is offering a valuable service to a large section of the society, people who often, cannot get a loan from anywhere else when they are facing an emergency. In fact, many studies have revealed that these people are returning to the payday lenders again and again when they need a loan. If the payday lending companies are driving the people into a debt trap, then would the same individuals be able to repay on time and come back to the lending companies? Probably not!

A personal loan and a payday loan will both give you credit when you are a little short of cash. This is why many people believe they are both the same or at least extremely similar in nature and how they work. So are there any differences between the two? Actually, there are many differences.

What is a Personal Loan?

A personal loan is much like a conventional loan, with a key difference. This is unsecured debt, so there is no need for collateral. While applying, you have to submit information about your current income. The lending company will then review your application and decide how much money you can get. There will be a fixed repayment period and interest rate. The repayment term can be for 1 year or more, sometimes up to 5 years. You have to repay every month, plus interest till the end of the term.

What is a Payday Loan?

A payday loan is also unsecured debt, meaning, here too, there is no collateral. You can apply online or offline at the lending office by submitting your personal and income information. The processing time is usually quicker than a personal loan, so you have the money in your bank fast. Payday loans are extremely short-term cash advances till your next payday, as the name suggests. They are usually for a couple of weeks at the most. The amount offered is also lower than a personal loan. Usually, the money offered in payday loans are between $300 and $1500.

Differences Between a Personal Loan and Payday Loan

Difference #1 – The Interest Rate

Let us compare this aspect first, because payday lenders have often been charged for their steep rates and driving their customers into deep debt.

Yes, it’s a fact that the interest rate is higher in a payday loan. The APR or Annual Percentage Rate in payday loans can be 200% or higher. However, do keep in mind that the APR is calculated for the entire year, and not just 2 weeks (which is the typical term of a payday loan), and so the conclusion can be misleading.

The amount you borrow with a payday loan is always smaller, and so it never actually pinches you that much. For instance, if you have taken a payday loan for $100 and have to repay after 10 days, then the outstanding amount on your payday will be $120. The APR here is a staggering 730%, but you still end up paying back just $20 more.

On the other hand, when you take a personal loan, the APR will be much lower. It will be something like this:

Credit Rating: Excellent – 4.29% APR approx
Credit Rating: Good – 4.29% APR approx
Credit Rating: Fair – 10.66% APR approx
Credit Rating: Poor – 25.00% APR approx

So when you take a personal loan of $10000 that is to be repaid in 3 years, you might end up paying back $3000-5000 extra. Many personal loan lenders also sell insurance with the loans. So when you add the insurance coverage, your outflow becomes even more.

Difference #2 – The Collateral

Both personal loans and payday loans are unsecured loans and thus are without collateral. But more and more personal loan lenders are now approving customer requests only when collateral is attached to the borrowing. So there is little chance that you might get a personal loan without collateral these days.

If you are unable to repay the loan for whatever reason, then the lending business will first issue you a notice and will then take away the asset that was the collateral. That will surely be a problem.

In other instances, personal loan lenders ask you to recommend someone who will stand as a ‘guarantor’. So if you default, the guarantor has to pay back the lending company. That will be an embarrassment if you cannot repay.

In a payday loan, on the other hand, there is no collateral or guarantor. Payday lenders issue the loan in good faith. The amount offered is small, and so paying back is normally not a problem. That is why almost everyone pays back the lender, irrespective of what the critics may tell you. Payday loans are the only type of loans currently in the United States that are completely unsecured.

Difference #3 – The Loan Processing Time

Usually, payday loans are processed very quickly. You can apply today and if you have submitted all correct information, the money can be deposited directly into your bank checking account within 2 working days. In some instances, the money can be deposited even on the following business day.

The personal loan may take a long time to reach your bank account. It may take many days and sometimes even several weeks. That’s because, the lender will carry out several checks and consider many things before finally approving your application.

A payday loan is the right solution in an emergency when you must have the cash really quickly. May be you are unable to pay the phone bill and your connected can be discontinued unless you pay in a day or two, or perhaps your car has a mechanical problem and you cannot go to work unless it is repaired fast.

Difference #4 – The Amount

Payday loans are usually issued for small amounts of money, normally between $300 and $1500. Sometimes, the amount involved is even less – just $100. You are also not allowed to take two payday loans at the same time to get more cash. The cash advance here is not to solve your long-term finance issues. It is to solve your immediate cash crunch situation, or solve an emergency situation, like, for instance, paying utility bills, buying medicines, or carrying out urgent car repairs. The lender will not ask you why you have applied for the loan.

A personal loan is to get a much larger amount. It could be $10,000 or even more. Since the amount involved is more, you can solve larger financial issues with this money, perhaps pay off another debt. You may be asked the reason for borrowing, but this is not mandatory. The loan term will vary depending on how much you are borrowing, the interest rate, and the repayment period.

Difference #5 – The Loan Duration

Payday loans are short-term loans, while personal loans may not always be for the short-term. The payday lender will always give you the cash to be repaid on your next payday. So the term is usually for 2 weeks at the most. Technically, however, it could be for up to 30 days, if that is, you have spent all the cash from your last paycheck and must get a loan right after. There is just 1 single payment in a payday loan. Of course, the payday loan you take could also be for less than 2 weeks, perhaps only a week. On your next payday, you have to pay back the sum you borrowed and the interest to your lender. The payment is through automatic debit from your account or a post-dated check.

A personal loan term is for several years. The term can be anything between 1 year and 5 years, and sometimes it is even longer. You have to repay every month as the money borrowed is much larger. There will be several monthly installments, consisting of both the principal and interest.

Difference #6 – Rollover

What happens if you cannot pay back the payday loan on the due date? This is rare, to be frank, because the amount involved is small. But even then, there are always some people who cannot pay back on time, like it is with any other type of loan.

The lending company may agree to a rollover if you are not able to pay back the payday loan on time. You will be charged a fee for this, but you will get a few more days time. It’s like a second chance, and often, this makes a critical difference.

There is, however, no rollover in a personal loan. If you cannot repay, the only option left for you is a debt consolidation. Many lenders now offering personal loans do so only against collateral. So if you cannot repay, there is always the risk that the asset you held as the collateral may be taken away.

Yes, there are a few similarities between payday loans and personal loans. But there are far more differences between them – in the total amount of money you can get from the lender, the term, interest rate, and how quickly and easily you can get the loan, and in other areas as well. All things considered, a payday loan would be a better option for most people, and that is why these loans are becoming so popular, not just in the United States, but all over the world.

The payday loan industry has often been criticized by many people. Legislation and regulations have been passed at the federal, state and municipality levels to impose restrictions and control their operations. But did you know that many regional and even national banks too are also in the business of offering payday loans? They often disguise them under an appealing name, but in effect, they are nothing different than the payday loans offered by the many storefront and online operators.

Yes, the short-term lending solutions of banks to meet a financial shortfall are nothing different than payday loans.

At least 6 banks were involved with payday lending. These loans were offered to their checking account customers. For instance, this is what the website of Wells Fargo says, “If you’re facing loan payments, medical expenses, or repair costs you just can’t afford … Apply for a loan”. Incidentally, this is like the same language payday lenders use.

Charges of Banks Much Like the Payday Loan Industry

Banks have also been imposing fees, which are much like the payday lending industry. The fees range between $7.50 and $10 for each $100 borrowed. The disclosed cost came to 120 percent annual interest, which comes to 120 percent APR. The maximum amount offered was $500, which is less than payday lending, because many of them will sometimes offer up to $1500, based on the need of a customer.

Repayment is due on the payday of the borrower. Also, a study carried out by Borné and Smith has found that the average payday loan term for the banks has been around 12 days. A white paper published by the CFPB agreed with this finding. The banks even acknowledged offering these short-term loan products.

The banks deposit money directly into the checking account of their customers in the same bank. Consumers can withdraw online, through a toll free call, or with an ATM. These banks will often withdraw money directly from the account, if the consumer fails to pay back on time, even if the account goes into overdraft status. If this happens, then the bank will also charge an overdraft fee, with the exception of Fifth Third and Wells Fargo, who do not charge the overdraft fee for insufficient funds. They issue a warning to the customer saying that there could be penalty fees.

Inadequate Safeguards

Faced with criticism, the banks said they have “safeguards” in place for their payday loan products to make sure that the borrowers are able to pay back on time and don’t get into a debt trap. For instance, the bank won’t offer a second loan to the same customer till the time the original is not repaid. The fact is that, even the payday lenders follow the same principle, so there is in effect no difference here.

The CFPB recently found that in 65 percent of cases, the banks charged overdraft fees to their payday loan customers for insufficient funds. Payday lenders cannot charge an overdraft fee like what the banks do, so naturally there is no additional fee that has to be paid by the debtor. In this, a payday loan becomes cheaper than a similar bank product.

A Minneapolis-based Bank introduced payday lending in 2006. Loans were offered to those who had a checking account with the bank for at least 6 months or 12 months depending on some criteria’s. Directly deposited into the account, up to a maximum of $500, the money could be withdrawn online, at any of the bank’s branches, through a toll free number, or by using an ATM.

Maximum term of the loan was 35 days, and the minimum term was a single day.

They charged $10 for each $100 borrowed. The loan fee comes to 120% APR. The bank allowed repeat loans as well. In fact, the borrowers were allowed to take an advance in 9 consecutive statement cycles. The amount due was deducted automatically from the checking account with the bank. Payment could also be made online or by cash by walking up to any branch of the bank.

For a first time overdraft, per item fee was $19, which went up to $35 for overdrafts between 2 and 4 times. It was $37.50 if the account goes into overdraft 5 times or more. The bank charges $8 a day at the start of the fourth calendar day.

With assets that go into trillions of dollars, another bank used to be the largest bank that offered payday loans. Customers who got a minimum of $100 or more deposited from an employee or another agency into their checking account every 35 days was eligible. The bank used to offer the loan to their customers in all states. People could get the loan online, by calling the toll free number of through their ATM cards.

The money was deposited into the account immediately following the application. Applications were approved even if the account had an overdrawn status at the time of the application. However, the application was rejected if the account had negative balance for 7 days or more.

They too used to offer these loans up to $500. The maximum loan term was 35 days, and the minimum was for just a day or two. The cost of these loans was $10 for each $100, which came to 120% APR for one statement cycle.

They used to charge a late fee of $35 for defaults, and also the costs for collecting the payment and the attorney fees of the bank. No grace period was issued. Payment was deducted automatically from the checking account even if it did not have adequate funds and went into negative balance. Borrowers could also transfer from account themselves.

Called “Early Access”, customers could ask for the loan if they had an account for a minimum of 6 months, and had a deposit of $100 at least in two consecutive statement cycles. Checking accounts of students, those of minors, and non-individual accounts were not eligible. The bank offered this loan to their customers in many states, not all. Funds were transferred as soon as the request was successfully submitted. Access too was immediate. Customers could withdraw the money by using their ATM card, online, and directly at the bank.

The maximum loan size was $500, while the minimum amount was just $1. Fifth Third used to charge $1 for each $10 borrowed. The APR came to 120%.

Payment is taken out directly from the account on the due date, even if the checking account goes into negative balance. Customers were also allowed to pay themselves at a branch or online. Fifth Third used to charge an overdraft fee and also a fee for maintaining insufficient funds. The overdraft fees were $25 for a first incident in the year. For 2-4 overdrafts, it was $33 each, and $37 for 5 or more times in a year.

Of course, many of these banks have since then stopped offering their payday loan products, but they continue to offer others that charge steep fees and interests. Often, the cost for a consumer is very steep, indeed. But still, the payday loan industry has to face significant criticism and sanctions from many critics across the country. Most of them remain silent about the history of the banking sector, and what many of them are doing to this day.

It is no surprise that a large section of the population in the United States and in other countries too depend on payday lenders whenever they need cash urgently in the middle of the month. A payday loan remains their only hope because the conventional banking sector and other lenders are unable to meet their requirements.

Critics will often say that payday loans are abusive. In fact, this has been a common complaint in recent years. Some of these critics are even asking for more legislation and regulations for the industry. Payday lending businesses across the United States have been opposing this, showing the world the service they offer to large sections of the population who need the cash urgently, often without anywhere else to turn to. The world is slowly coming round to this view and accepting it.

Newsweek recently published a report, which says the payday lending industry is extremely regulated, which is in stark contrast to what the critics are saying. They have drilled down and examined the state-level and federal regulations that are in place at this time, and also the jurisdictions at the municipal levels to finally arrive at this conclusion.

Let us now take a closer look at the regulations that are in place at the federal and the state levels. We can understand this even better if we look closely at one state and a city in that particular state. This will help us understand the regulations governing payday lending at all levels in the United States.

Federal Regulation in the US

Adequate regulation is in place already for the payday loan industry. For instance, all types of lending in the US, is being regulated by the ECOA or the Equal Credit Opportunity Act, and payday is a part of this. ECOA is a Civil Rights-era law, which makes it illegal for creditors to consider gender, color, race, religion, nationality, age, marital status and income while underwriting loans.

All lending businesses have to obey consumer protection regulations, such as the Truth in Lending Act of 1968 that standardizes and regulates disclosures for lenders. False advertising and misleading disclosures can be fined heavily.

There is also the MLA or the Military Lending Act, which prohibits loans to be offered at over 36% interest to people in active military duty or their spouses. It also bans practices like early repayment fees.

Every lender, including payday loan businesses have to obey their state laws. Lending products, such as credit cards, for instance, and also mortgage lending don’t have to comply because of a 1978 US Supreme Court ruling (Marquette National Bank of Minneapolis vs. First of Omaha Service Corp.), where it was said that the state’s anti-usury laws would not apply for nationally chartered financial institutions.

Payday lenders are not chartered nationally. They are all state chartered, and so, they are legally bound to obey the state laws.

State Regulation

In the United States, most regulations are actually at the state and the municipal levels. In fact, in all the 50 states of the country, there is some form of regulation for payday lending. It can be said that there are three regulatory regimes, which are:

1. Permissive – The states with the least regulations for payday lending, where the fees can be 15% or more and the amount can be paid back in 1-2 weeks.

2. Restrictive – The states with the maximum regulation where payday lending is effectively banned. In the former years, these states also banned postdated checks, which was the only way storefront lenders used to operate.

3. Hybrid – This is in between permissive and restrictive. There are restrictions on how many loans a borrower can take or rate caps. Early repayment and installments are allowed.

Texas State Law

There is significant regulation already in the US state of Texas, governed by the OCCC or the Texas Office of Consumer Credit Commissioner. There is “usury law” in place in the state, which places a limit on how much interest a lender can charge from a person. According to the Texas laws, creditors are not allowed to charge interest more than 10% without being licensed. The only exception is when civil court passes a judgment allowing this. But then too, it has to be lower than 18%.

For a payday lending business to operate in the state, under the Texas State Finance Code Chapter 393, Texas Administrative Code Chapter 7, Part 5, Chapter 83, Subchapter B, if a business charges more than a certain fee, then it has to be registered as a CAB or a Credit Access Business.

Payday lending is also governed by the Texas Finance Code. This applies to both storefront loan providers and online lenders. The maximum term of the loan can be one month for a loan of $100 or less for multiples of $10. If it is more than $100, then it would be $20 for each multiple.

In Texas, lenders cannot issue a payday loan of more than $1800. Borrowers are also not allowed to take multiple loans, if the amount of these loans crosses $1800.

In a few states, defaulting on the repayment can be considered a criminal violation. In Texas, however, there is no criminal violation, even if you willfully default. So the lending business cannot charge you in a criminal court. But, the lender can still charge you in a civil court, and force you into bankruptcy.

Houston City Laws

The city of Houston has passed regulation, which is, in fact, more restrictive than the state of Texas. It was in 2013 when Houston passed an ordinance for payday lending. This legislation is based on model legislation of Texas Municipal League. Here are some of the major features:

CABs or Credit Access Businesses have to be registered with the city.
CABs cannot issue an unsecured loan, which is more than 20% of the gross monthly income of the borrower.
More than 4 installments or 3 renewals/rollovers are not allowed.
Each installment amount must pay off the loan principal by a minimum of 25%.

Many other cities in the state of Texas, such as Dallas, Amarillo, Austin, San Antonio, Galveston, Garland, El Paso, Baytown, Midland, and South Houston are also following similar laws. However, it is still not clear whether cities have the power to enforce an ordinance on businesses that are not registered there. However, one thing is clear. Municipal legislation for payday lending is very proactive in Texas.

Of course, there is plenty of regulation in place already in the other states of the US and also at the city levels throughout the country to protect consumer interest and stop businesses from practicing unethical and illegal practices.

That is not all. The CFSA or the Community Financial Services Association of America, the trade group of payday lenders, is also ensuring that their member businesses are operating legally and ethically. The CFSA frames rules after detailed research, which includes inputs from the public, industry and consumer roundtables, field hearings, advisory bodies, and small business review panels. Proposed rules are then created. All stakeholders are then invited to comment. The CFSA also ensures that deceptive lead generation and advertising is stopped.

Enough Regulations Already

So you see, there are enough regulations already at the federal, state and municipal levels. It would thus be wrong to say that more regulations are required to reign in the payday lenders, as is the demand of the many critics. If that is done, then it would practically be the end of the business, which is serving the millions of Americans who need the cash advance in real emergencies. In fact, many of these people don’t have anywhere else to turn to other than the payday lenders when they need a loan.

The payday lending businesses are here for the long-term. It is in their interest that the consumers are able to pay back, because only then will they have the funds to make loan offers to others. Payday lenders will thus do everything in their powers to help their clients pay back. If they cannot repay in time, then many lenders will even agree on an extension and a revision of the terms of the loan.

There is absolutely no reason to fear payday lending. Millions of people across the country are taking these short-term loans when they need cash in the middle of the moth and are paying back in time. It’s just a small portion that is defaulting, which, in fact, is the case with any type of loan, and not just payday lending.

Just know the current laws at the federal level, the laws in your state and city that protect you. Ask all the questions you have before taking the loan. Read the terms and conditions carefully before finally taking the loan. You will be adequately protected.

There are a few similarities between payday loans and installment loans. For example, they are both small dollar loans where the lending business will give you a cash advance for just a few hundred dollars, unlike the banks and other conventional lending institutions, which generally are not keen on such a small amount. Secondly, both these types of loans and processed and approved quickly, and is thus of great help to those who need the money urgently because they are in an emergency.

However, make no mistake about this. There are lots of differences between payday loans and installment loans. They may seem to be the same because of a few similarities, and that is why many people often get confused. But the two are not the same.

Let us try to find out what makes the two different.

What Is a Payday Loan?

A payday loan is a short-term cash advance that is issued till the next payday. It is usually for a couple of weeks. The money advanced is between $200 and $1000 in most cases. The application process is easy. Processing and approval is quick. The money is credited directly into your bank account. On payday, the full amount plus interest and fees is debited from your account. Most of the payday lending businesses is located around the big cities. In recent years, many of these businesses are working online.

What Is an Installment Loan?

You can take an installment loan for the short-term, much like a payday loan, or for a slightly longer time. That is a big difference between the two. These loans too, usually are between $200 and $1000, but sometimes, the lending company will agree to provide a loan for a larger amount of money. In fact, this can even go up to thousands of dollars if the lender agrees. The repayment terms are also different. As is evident by the name itself, you have to repay the loan over a period of time in a series of installments.

Mortgages and car loans are also installment loans, but in recent years. There is often collateral with installment loans to secure them, such as personal property like consumer electronics, your automobile, jewelry, power tools or firearms. However, wedding rings and real estate is not accepted as the collateral. However, lately, they have included unsecured loans too, much like payday lending. Unsecured loans mean cash advances without a collateral. In payday lending, there is never any collateral involved.

The Application and Approval Process

You can apply to both these types of loans over the internet. You can apply a payday loan with us here. Most of the lending businesses have their physical offices too where you can walk in and make the application. The application process is easy. You have to provide some basic information like your name, address, contact number, email address, and social security number. For both payday and installment loans, you have to prove that you have a stable source of income as the loans are offered without collateral.

Processing begins as soon as you have completed the application process. If you have provided accurate information and all documentation if asked for, then the approval process is quick too for both these types of loans. It will take between 2-3 business days for the money to arrive in your bank account. It is a direct credit transfer.

The approval requirements are however tougher for installment loans. Many lending agencies will use a monthly net income/expense budget formula to make sure that you will actually be able to repay the amount. That’s because, these businesses are taking a higher risk, as installment loans are for a longer period of time.

With payday loans, on the other hand, the lending business has a lower risk. The cash advance is just for a couple of weeks, and the money is deducted directly from your bank account after the next payday.

How Much Do You Have To Repay?

For both, you will need to repay the initial amount you borrowed, plus the fee and the interest that is due. So which one is going to cost you more money? Initially, it may seem to you that a payday loan is costlier because the entire amount plus the extras are to be repaid at one time, together. But that is not the full picture.

When you total the amount eventually repaid to the installment loan lending business, you will notice that this will end up costing you more because you have to repay for a longer period of time.

Plus, an installment loan is going to keep you in debt for a much longer time. With a payday loan you are over and done with after just a couple of weeks once you have repaid after your next payday. An installment loan, on the other hand, can keep you in debt for a long time, sometimes for several years, depending on your loan terms, and the amount you had borrowed initially.


Both installment loans and payday loans are legal in the United States and many countries in the world. Installment loans are licensed and regulated by both Federal and State consumer protection agencies. Payday lending is legal too in most US states, but in recent years, many restrictions have been placed on them on the accusation that the lending businesses are charging a high interest rate. The actual restrictions imposed vary from one state to another. So you should check the laws in your state before agreeing to take a payday loan.

Here is Legal Status of Payday Loans by State in The United States of America.

Many critics have slammed payday lending for the supposedly high interest rates. In recent times, however, many, including some lawmakers and even experts have come out in favor of payday lending because these loans are the only hope for a large section of the people who need cash in an emergency.

Payday loans are short-term loans for just a couple of weeks. So how much more would you end up giving away as the repayment? An installment loan keeps you in debt for a longer period of time, which may not be the best plan for people who are not doing well financially, as many of them have an uncertain life anyway.

Interestingly, though a lot of critics are still against payday lending, but these loans continue to remain popular throughout the country. Millions across the United States and elsewhere in the world continue to take payday loans.

The Repayment

There is a difference between payday loans and installment loans here as well. Typically, when you take a payday loan, you have to issue a post-dated check, which the lending business is going to cash after the next payday. There is no requirement for a direct debit from the bank account you had provided as you have to make the payment to the lending business just once. On the other hand, the money due in an installment loan is directly paid or withdrawn with a check every month from the bank account you had provided while taking the cash advance.

Rolling Over the Loan

Both these loans have a fixed term. In the case of payday lending, it is till the next payday, as the name suggests. On this date, the amount due will include the amount you borrowed, and also the fees and interest. However, if for some reason you are unable to repay the total money due, then many lenders will agree to roll it over for the next couple of weeks or a month. But new fees are going to be added, which is the same that happens with banks and other conventional lenders when you cannot repay on time.

In the case of an installment loan, there is also a fixed term, and till that time you have to make installment payments every month. It’s just longer than a payday loan as the term can even be for a year or more. You can renew an installment loan every few months. When you do this, additional interest and fees and added to your loan.

A renewal sometimes comes with a small “payout”, which represents a portion of the principal you have paid off already as installments in the last few months. In this case, the loan amount will typically reset to the original amount that you borrowed, or it may even get increased.

Here’s something nobody expected would happen. After the many criticisms payday lending has received in the last few years from some quarters, and the recent laws and restrictions imposed on the industry, it was expected that payday lending would go down steeply. Almost everybody was expected to stay away from these lenders because they supposedly exploit their customers by charging so called steep interests. In fact, many predicted that the payday lending industry would go out of business soon and even seemed worried about the unemployment this would generate.

But here’s what actually happened. According to a report published by the Department of Business Oversight in California, the numbers of payday loans the seniors are taking in the state have actually tripled over last year. Yes, that is three times more. In other words, payday lending has become more popular in California, in spite of the negative press the industry has received and all the restrictions imposed.

Number of Payday Loans Goes Up From 945,000 to 2.7 Million

The report says, seniors in the state, aged 62 or more, took 2.7 million payday loans last year. In 2015, by contrast, people in the same age group took fewer than 945,000 loans. The Department of Business Oversight is at a loss to explain why this happened. They are confused, to say the least. The study also reveals that many seniors in California are taking payday loans multiple times.

Many in the state are taking this trend very seriously and are saying that this could be here to stay. In fact, 2017’s data when released might even reveal that even more seniors are taking payday loans for more times in the state. Others are pointing out that California is often seen as the harbinger of a national trend, so there is every possibility that this trend could soon be seen across the country. After all, there have been several instances where things happening in California first, spread across the US later.

The State of Payday Lending in California

According to statistics, there are about 2000 payday lending stores in California. Most of these businesses are located in poor neighborhoods, operating among people who are most likely to have low cash reserves in the middle of the month. Historically, those who have taken these loans the most are colored people (mostly blacks), single mothers and people from the Latino community.

Research findings of the California Department of Business Oversight (DBO) has also confirmed that most individuals who are taking payday loans in the state live in poorer neighborhoods and are from these communities. This is the government agency, which oversees financial service providers, including payday lending businesses, in the state.

Their research revealed that in the neighborhoods with the most payday lenders, the family poverty rates were usually higher than the state average. Also, the percentage of poor families with single mothers was higher. This was confirmed after the agency looked at the 2014 census data relating to the location of payday lending stores.

The DBO concluded by saying that Caucasians or whites are less likely to take payday loans, while blacks, Latinos and single moms are more likely.

Payday Lending Is Not Making People Fall Into a Debt Trap

Those who are critics of payday lending often state that those who take these loans fall into a debt trap soon, so payday lending is contributing to poverty. The California Department of Business Oversight does not state this, however. It’s not a case of a payday lender making people impoverished. It’s the other way round, the agency states. The lenders have their stores in these neighborhoods because the people who live there are impoverished, and need cash.

CFSA or the Community Financial Services Association of America, the trade group of payday lenders, agrees with this view. In their website they have said, “Just like Home Depot and Costco, payday advance stores are located in population centers that are convenient for where customers live, work, and shop”.

The Santa Monica, California-based Milken Institute carried out a study of their own a few years back, and they arrived at the same conclusions as the DBO. Their 2013 study noted that payday lending businesses were catering to a “specific set of customers”. Their customers are mostly those with lower incomes, less formal education, and those from minority communities.

The study carried out by the Milken Institute also discovered that there were more payday lending stores in counties where there was a higher percentage of Latino and black people than those counties with more whites. So the Institute concluded by observing that there is “a negative correlation between income per capita and the number of payday lending stores per capita”.

Payday Lending Demographics Has Changed

The Milken Institute report came out in 2013. A lot has changed since then, as the California Department of Business Oversight research findings show. Now, it’s not just the blacks, Latinos, the poor and marginalized sections of the society that are asking for payday loans. Even the seniors who are aged more than 62 years are taking these loans, and many of them have retirement plans.

This clearly reveals several truths

1. Economy of the United States is in such a state that those who did not require a loan before, such as the seniors with protection, are also short of cash in the middle of the month. Payday loans are offering them the much needed respite.

2. Payday loans are becoming more popular, in spite of the bad press in recent years and the imposed restrictions.

3. It is not just the poor, blacks, Latinos, and single mothers any more like before. People from other demographic backgrounds are approaching payday lenders now as well. Some observers are feeling that this might, in fact, become a nationwide trend soon. Many people in California and elsewhere in the country are short of cash and finding it difficult to make ends meet.

4. A large section of the population is still un-banked or under banked.

5. Payday loans remain the only practical option for those who need cash in an emergency in the middle of the month. Banks and other conventional lenders won’t issue small dollar loans. Even when they agree, it takes too long to process and approve the loan. In an emergency, people need the cash quickly, which only the payday lenders can provide.

Payday Lenders Are Filling an Important Gap

The Community Financial Services Association has repeatedly stated that payday lending businesses are filling a critical gap. Those in need of urgent cash, those rejected by conventional lenders, and communities that are not being served by banks and credit unions have nowhere to turn to. Payday loans remain the only hope for them.

The implication of doing away with payday lending completely can be catastrophic. Look at the following situations to understand what might happen if these loans are not available to those who need the cash in the middle of the month.

1. A family short of cash and unable to pay the rent can land up on the street.
2. Inability to pay the utility bills may mean no service received.
3. No money to pay the school fees. No education for the kids.
4. No money for medicines. Serious health risk.
5. No money to make car repairs. The person may not be able to go to work and may end up losing the job. This is a very serious situation indeed.

Payday lenders are helping people avoid all these situations by providing them the money they need, and when they need it.

The CFPB Is Protecting Consumer Interest

The Consumer Financial Protection Bureau is a responsible body that investigates the functioning of their member businesses to make sure that they are ethical and complying with all the rules. Rules are framed after detailed research, which includes inputs from the public, industry and consumer roundtables, field hearings, advisory bodies, and small business review panels. Proposed rules are then created. All stakeholders are then invited to comment.

Once the rules are passed, the CFPB actively monitors the businesses to ensure that they are complying.

The CFPB is already doing everything. Surely, there is need for state and federal laws even after this. But these laws need not be as aggressive as many critics want them to be. They have to remember that millions of people in the US depend on their payday loans, without which they will have nowhere else to turn to.

Meet “Dave”, the finance app, which predicts upcoming expenses, and issues alerts to customers when their balance is at risk. Powered by high-end artificial intelligence, Dave is saving hundreds of consumers from expensive overdraft fees and is issuing warnings about the high costs charged by the banks.

Co-founder of this Los Angeles, California-based business, Jason Wilk says the ultimate objective of Dave is to help consumers avoid bank overdrafts because it is one of the most “expensive forms of credit”. Wilk describes Dave as the “weather forecast for money management”.

Not just that, Dave is even promoting payday loans, saying that it is cheaper than bank overdrafts and more customer-friendly.

There is a lot of evidence that shows payday lending is one of the best forms of credit. Let us take a few cases and analyze them to understand why.

Case #1 – Overdraft Fees and How the Banks Abuse Their Consumers

Let’s take an example to understand this better. Assume that a person is a little short of cash and needs only $200 for say making utility payments. No conventional lending agency will offer a loan for such a small amount. So the person has to write checks for the bills, knowing that there is no money in the bank to cover the payment. This is when the bank will charge its overdraft fees.

Usually, for each bad check, the bank charges an overdraft fee of $35. This money is debited as soon as fresh funds are deposited in the bank account. There is an additional late fee as well if this deposit is after the billing month ends.

If the person wrote 3 overdraft checks with a total sum of $100 for paying bills, the total amount outstanding will be $205, when you add the $35 fee for each check. Remember, the original debt was just $100. This makes the interest rate 105%. Now, if we amortize this amount into an annual percentage rate (banks do this for payday lending), then the bank’s interest on overdrafts is more than 1,000% annually, which is much more than the 200% charged by the payday lenders.

Add the late fees, and the total charge of banks will cross 1000%. That’s not all. The 3 vendors that received the bad checks will also charge between $20 and $45, which means, the cost is even more. You could have saved all this by taking a payday loan. Of, course, you cannot write a bad check knowingly. It’s against the law. In most states, this is a jail offense.

Case #2 – Congress Is Rolling Back Payday Lender Regulations

After a hard-fought battle between the financial industry and consumer advocates, the CFPB or the Consumer Financial Protection Bureau issued a draft rule about a year back to rein in the payday lending industry. Payday lending businesses objected saying this was unfair, but these objections were overlooked. Now it seems they have finally realized the truth. The Congress is getting ready to pass regulations to rollback the payday regulations. The U.S. House of Representatives is going to vote soon on the Financial Choice Act. The bill will prevent the CFPB from regulating payday lending businesses.

So, if this bill is passed, the draft rule won’t go into effect. The CFPB is going to be barred from enforcing the current laws. This means that, once passed, the Financial Choice Act is going to remove the authority of the CFPB completely.

The payday industry has been saying for a while now that the restrictions imposed on them is unfair and unjust. So far, most critics and lawmakers have largely ignored these claims, though there have been instances where many of them and even some experts have agreed with what the industry is saying. The fact that the popularity of payday lending continues to grow not just in the United States, but throughout the world, has also been ignored. The millions of people from all kinds of backgrounds cannot be wrong. They have a real need for urgent cash, and see real value in these cash advances.

However, finally, it now seems like, the lawmakers are seeing the point, and are beginning to understand why payday lending is so important.

Case #3 – Workers Taking Payday Loans to Make Ends Meet

According to the findings of a new study, which was carried out in the UK, more and more public sector workers are now taking payday loans to pay off unexpected bills and make ends meet because of the sharp rises in prices in recent times. Many of these workers were found to be “barely managing”.

The study was conducted by one of the largest loan comparison sites. The polled 8000 people who were applying for a short-term term, and analyzed the inputs before the results were published. Most of those polled are council staff, teaching assistants, or nurses. Most of these people stated they need the money to pay off unexpected bulls. More than 10% said they wanted the money to pay rent or a utility bill. Also, it was found that 43% of these people have taken five or more payday loans in the last year.

What is happening in the United States is not much different. The story is much the same. In fact, several studies in the country have indicated that a huge section of the population have to take payday loans to meet their sudden cash requirements because of an unexpected expense. There is no other practical alternative. Banks and other traditional lenders take too long to approve loans. Also, they don’t usually approve small-dollar loan applications for just a few hundred dollars. Plus, it is a fact that a large section of the population in the United States is still un-banked.

Payday loans have come under a lot of attack in recent years. Many regulations and restrictions have also been imposed on them. But the reality is that, these loans are even today an integral part of the lives of many people. They need the cash to pay off important utility bills, pay the rent, buy medicines, make urgent car repairs, and for various other reasons. A family may end up losing their home or a person may miss his medicines if the cash is not made available urgently. That’s how important a payday loan service is for these families and individuals.

Case #4 – Google’s Payday Loan Advertisements

In May 2016, Google announced they won’t show payday loan advertisements through their AdWords PPC service. Many payday lending critics praised Google for this. The policy eventually came into effect in July 2016.

Google banned advertisements when the term of the loan is for 60 days or less. This virtually eliminated payday lending because these short-term cash advances are usually for just a couple of weeks or so.

Most of the sites that show advertisements about payday loans are indirect lenders. They collect important information on behalf of payday lenders. They are payday lending facilitators. In almost all the landing pages of these websites, you will find content that mentions short-term cash or payday lending.

Amidst debates and regulations fact is a large section of the population needs short-term loans, without which they will be in deep trouble. Payday lending is one of the best short-term forms of credit. You just borrow a few hundred dollars, so the repayment amount is less. It’s a short-term loan, so you don’t end up in deep long-term debt. Most importantly, you get the money quickly, which is critical in an emergency. Payday loan applications are processed and approved quickly. The money is deposited to your bank account within 2 to 4 business days.

You can apply a payday loan with us for fast approval.