Payday Loans is a great way to get quick cash when extra money is needed between paydays. Since many people do not have regular income streams, payday loans are a good alternative to borrowing money from family and friends. Payday Loan Rates has been on the rise over the past couple of years, due to the high demand for quick cash. Payday Loan Scams is on the rise as well and there is no need to take a short term loan from a company that charges exorbitant interest. There are a couple ways to avoid being scammed or falling prey to unscrupulous payday loan companies.
Over the past couple of years, several states have passed legislation to limit payday loan rates in order to protect consumers from becoming too deep into debt with these traditionally expensive loans. Recently, in November, voters in Nebraska passed a measure to cap payday loan rates at 36%.. Although this is only a portion of the overall payday loan rates, it is still a great step in protecting the consumer. The legislature in Nebraska is expected to pass even more legislation aimed at protecting consumers and preventing payday lenders from taking advantage of people in financial situations.
Consumer advocates were quick to applaud the efforts of the legislature inbraska to curb payday loan rates. "Voters were concerned about high-cost payday loans, and the actions taken by the legislature is a big step in the right direction to rein in high-interest loans," says Victoria Czaia, a spokesperson for the American Consumer Association. "The upfront costs of the loans create a challenge for many people, especially those with limited income. By capping the interest rate, the state is taking an important step towards ensuring fair treatment of the economy."
In June, 2021, the National Consumer Law Center held a workshop focusing on payday loans. The study says payday loan rates have risen dramatically in recent years. Some states are actually experimenting with limiting interest, while others have not. "A lot of states are trying to figure out how to control these terrible practices," says study coordinator Jennifer Decker. "We've seen some fantastic success states are taking, and it's encouraging that states are working hard to limit these predatory practices."
States are considering a variety of possible solutions to the problem. One bill introduced in the North Dakota State Legislature would limit the annual interest rate for payday loans. Another proposed bill in Tennessee seeks to prevent lenders from adding annual interest to loans already underwritten. A bill introduced in California seeks to eliminate the annual interest rate on a payday loan based on the amount borrowed and the annual percentage rate charged by other lending companies. And yet another bill in Maine seeks to exempt payday lenders from the consumer protection provisions of the Fair Debt Collection Practices Act.
Payday lenders argue that these federal regulations are burdensome and prevent them from providing affordable loans to borrowers. Opponents of the federal regulation point out that federal regulations already exist and that it is the state's burden to police those laws. Meanwhile, payday lending companies say they are operating within the state laws and are not subject to federal oversight. But critics of payday lending say borrowers still have the right to know about loan rates. "The problem isn't really the federal regulation itself, but the lack of transparency in state laws," says Jake Sterner, legal counsel for the Financial Planning Association of America.