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  • Prof. C

Payday Loans-Cheaper to Get or Harder to Come By?

When I'm home in Beaumont, I see literally dozens of payday and car title loan shops lining the streets, always in the poor, predominantly black neighborhoods. Admit it, you've seen them too! The Harvard Law part of me recognizes that these shops are predatory lenders, preying on the most financially vulnerable members of society and trapping them in cycles of high-interest debt from which there seems to be no escape. The Northend part of me recognizes that these payday and car title loans, however abusive and unfair, are a source of credit many individuals need just to survive the curve balls life sometimes throws at us--car that broke down, baby daddy that suddenly missed his support payment, an illness that caused you to miss work for a few days (or a few weeks!). These loans meet a very real need for credit for a lot of people in a lot of communities, but they are also extradonarily abusive. Getting a $300 cash advance on a credit card would cost about $13 if repaid in 30 days. The same cash advance as a payday loan would cost about $105 if repaid in thirty days. If you had an extra hundred dollars just to throw away on fees, you probably wouldn't be taking out a payday loan in the first place, right? Well, the good news is that a new government agency, the Consumer Financial Protection Bureau, is trying to develop some new rules to make payday loans less unfair. Many of these rules are designed to keep lenders from offering you a pay day loan they know you can't repay and will have to roll over or renew at their outrageous interest rates. In other places, state governments are stepping up and putting limits on how much these lenders can charge. If you're in Texas, the "cap" for a two-week payday loan is 309% APR! Not much of a cap when compared to DC, which caps small loan rates at 24%. But it is much better than Lousiana where the cap is 780% APR. (Louisiana, this is outrageous! Who dat y'all voting for???)

But I digress. The basic point of this post is to raise awareness. The new regulations will make payday loans cheaper to get or harder to come by. If you are someone who sometimes uses payday or car title loans, and you have a preference--you want them to be cheaper to get rather than harder to come by--please make your voice heard. I doubt that anyone who works at this Burea has ever taken out a payday or car title loan, so help them out by sharing your experiences and views at this link.

They are a bureau dedicated to protecting YOU, the consumer. So, don't be shy. Let them know what you need and what you don't!

If you want some ideas on how to get out of a payday loan debt cycle, or how to avoid payday loan debt, or just want more information about payday loans and how they work in your state, you can check out this site.

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