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Alabama State Banking Department Says Payday Lending Is Popular

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The Alabama State Banking Department recently decided to carry out a detailed survey to create a new payday loan database. They wanted to find out how many people were asking for these short term loans, in the belief that such a database will help the state have better understanding of the current economic situation. They also wanted to find out the profile of people who were asking for such loans.

However, just eight weeks into this study, the department has come to the conclusion that payday lending is extremely popular in the state. The database is showing big numbers for these loans.

The decision to create such a database was arrived at first in 2013. However, the initiative could only be launched on August 10th this year, after months of delay. John Harrison, the Superintendent of the Alabama Department of Banking, said while launching the program, “There is a need for this type of product”.

The state also wants to track where the money is coming from and where it is going. “We want to know geographically, what part of the state is using it the most”, Harrison says.

Impressive Figures of Payday Lending Companies

The department has been taken by surprise by how popular these loans are among the citizens. They discovered that between August 10th and October 5th, these businesses issued 386,641 payday loans. The total money borrowed stood at more than $123 million. The weekly average is at a stunning $15 million.

Everywhere you look, there are payday loan businesses in the state. In fact, according to estimates, there are 899 payday business outlets now. Interestingly, this comes to more than the total of Subway, McDonald’s, and Burger King outlets in Alabama as together, these restaurants operate from 890 places. That is impressive real estate for the industry, and figures no state can ignore.

Payday Lending Is Good For the Economy

With 899 outlets, the payday businesses are surely employing thousands of people in the state. The newly created database also shows that these lending agencies profited $21.3 million in these eight weeks alone, and so, they are contributing towards the state’s economy too through tax contributions.

Did Harrison already have an inkling of what the finding was going to be? That’s because, while launching the program on August 10th, he said, “I just think it’s going to open a lot of eyes to a lot of people and hopefully, it’ll be good for everybody”.

The numbers that have come out in the report certainly looks very impressive. It proves once again that no matter what some policymakers and critics seem to think and propagate, the actual end-consumers don’t have a problem with these small dollar loans. And that is precisely why, more and more people are asking for these loans when they need some extra cash to solve temporary money problems, or for real emergencies. In fact, if anything, payday loans are actually becoming more popular with every passing day, and that is not just true in Alabama, but in many other states in the US as well.

A similar study elsewhere will probably reveal the same figures too. Currently, there are 15,000 McDonald’s restaurants across the US. On the other hand, there are more than 20,000 payday lending locations in the country. Would there be so many outlets if these companies weren’t so popular, and if they didn’t offer a useful service? Think about it!

Call to Protect the Payday Loan Industry

Elsewhere, there is growing demand that the CFPB or the Consumer Financial Protection Bureau should leave the payday lending business alone. Many members of the Congress have already stood up for these companies, saying that the regulations in place are adequate. Most clients who take these loans use the money responsibly. Statistics tell us that more than 90% of them repay on time.

New regulations that are stricter could bring about the death of many of these businesses, and it’s not going to be good for the economy. You cannot penalize an industry for the deeds of only a few who cannot repay on time. You cannot deny people for the faults of a small minority.

The tide was initially against voices that stood for the industry, but it’s clearly turning now, as more and more people gradually realize that payday loans are very useful for a vast section of the population.

In fact, there has been speculation from educated sources that many individuals who take these loans could end up with bankruptcy if the money is denied to them, and certainly that won’t be good news for the economy. We don’t want to see the Americans homeless. Do we? Credit squeeze could break up families as well and put their future under serious threat. It has also been pointed out a serious cash-crunch situation because of credit squeeze could lead to social as well as law and order problems.

Only last year, one advocacy group launched an advertisement campaign where they painted the payday loan businesses as vicious predators. Celebrities Sarah Silverman and John Oliver joined up, almost pleading people not to take these loans. We are sure that these people have good intentions. But the fact is that, many of them are making value judgments, and are not being rational or subjective.

Findings of the Pew Charitable Trusts

According to the findings of the Pew Charitable Trusts, there are more than 12 million Americans who borrow in excess of $7 billion every year from these companies. Can so many people be wrong? More importantly, many of them are individuals who won’t be given credit by most banks and other financial institutions. Almost always, the conventional lenders simply don’t bother about these people. It is not worth it for them to issue such small dollar loans, as the margins are not that attractive. The cost of loan acquisition is also too high for many of them.

Where will they go for a loan when they need money in real emergencies? There is no answer from these advocacy groups and lawmakers who want to clamp down the business.

If there was a better alternative than payday loans, it would already have been there by now. American consumers have tried other alternatives and in the end, have stuck to these businesses. Don’t underestimate or undermine the American people.

Some people find it difficult to grasp, but the fact remains that the payday lending industry provides access, and is often the only solution, to millions of individuals who would have been shut out otherwise.

And we too here at about100dayloans.com believe that payday loans is here to stay in America.

If you need a payday loan – please fill online application here.

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