David Roberts helps to educate consumers about payday loans. You can find his blog at No Fax Payday Loans Direct
A payday loan is a relatively small dollar loan extended for a short period of time. A typical payday loan is for $300 to $500 and is repaid by the borrower on their next payday, usually in a matter of days or weeks. Rather than charge interest in any conventional sense, payday lenders typically charge a set fee based on the amount of the loan. For example, a $100 loan might cost the borrower a fee of $15. And that's where the trouble begins.
A fee of $15 might not seem like much, but for a $100 loan that lasts all of two weeks, the annual percentage rate comes to over 350%. Lawmakers and consumer advocacy groups believe the APR is the proper and best way to measure the cost of the loan and seek to cap the APR payday lenders can charge. Just last week, the Ohio House passed a laws capping the interest rate payday lenders can charge to 28%. If the Ohio Senate passes the bill and it becomes law, it will effectively ban payday lending in Ohio.
There are at least three reasons why the Ohio bill takes the wrong approach to payday lending. First, using APR to assess the cost of a payday loan is misleading. There is a significant difference between charging a borrower $15 for a short term loan, and charging the same borrower 360% for a long-term loan. APR was designed to assess the cost of longer-term or revolving loans such as mortgages, car loans and credit cards. Its application to payday loans does not provide a meaningful assessment of the cost of the loan.
Second, laws that ban or severely restrict payday loans force consumers to turn to loan sharks and other "underground" sources for emergency cash. With the payday loan industry, state legislatures have an opportunity to impose sensible restrictions and to tax the profits of payday lenders. Driving the industry underground removes these oversight and revenue generating opportunities.
And third, study after study has shown that the use of payday loans in an emergency actually improves a consumers finances. The reason is simple. In these cases consumers are able to avoid foreclosures, evictions, or late penalties that can cause more financial harm than the cost of the payday loan. Removing this source of emergency cash would put many borrowers in far more financial jeopardy.
Where payday lending causes the most harm is with chronic repeat borrowers. These individuals use one payday loan to pay off the last, and find themselves in a continual cycle of borrowing that becomes nearly impossible to break. It is here that the state legislatures should focus their attention. And there are at least three protections legislatures should consider.
First, they should consider limiting the number of payday loans a borrower can obtain each year. Such a restriction would force repeat borrowers to break out of the payday loan cycle, while still allowing consumers to use payday loans in an emergency.
Second, state law makers should focus on the disclosures payday lenders must provide to borrowers. Information is power, and borrowers should fully understand the implications of their choices.
And finally, states should look to educate consumers about personal finance. Sound personal financial decisions can help avoid the need to access payday loans or many other sources of credit. Some states are instituting personal finance classes into the high school curriculum, a move that other states should follow.
- Related Videos
- Related Articles
- Ask / Related Q&A
- Payday Loan No Fax Payday Loans Online: Easy and Fast Way to Get Money
- Payday Advance Cash Fax Fewer Loans – Quick Cash for Employed Persons
- Payday Advance Cash Fax Less Loan-make Your Work Smoother
- Payday Loans No Faxing- Easy Loan with Fewer Formalities
- Payday Loans Without Faxing: Paperless Loaning for Small Cash Necessities
- Payday Loans No Faxing: Fast Loans With Less or No Documentation
- Payday Loans Without Faxing- Hasty Loans Without Any Obstacle
- Payday Loans No Faxing: Grasp Loans Within the Same Day




http://personalmoneystore.com/moneyblog/ This will further tell you the benefits of getting into no fax payday loan rather than to a bank.
Comparison Shop Shrewdly For The Best Mortgage Brokers, Quotes And Fixed Rate Mortgage Rates
By: Charlie West | 23/12/2009Once looking for the best mortgage rate, it's only normal that the primary issue you wish to alarm yourself with is the home loan rates. Aside from that, receiving the best mortgage rate is understanding what is the interest rate of your home mortgage.
Locate The Best Mortgage Rate
By: Charlie West | 22/12/2009Attaining the best mortgage rate is the topmost factor on everybody's mind while applying for a mortgage. There are a number of mortgage brokers who are enthusiastic to grant you rewarding deals. There are also various mortgage brokers who can appear to demand less of you but have many unseen expenditures.
Best Mortgage Rate - Getting A Low Interest Rate Mortgage
By: Charlie West | 22/12/2009Once looking for the best mortgage rate, it's only ordinary that the primary factor you would like to worry yourself with is the home loan rates. Except for that, attaining the best mortgage rate is knowing what is the interest rate of your loan.
Achieve The Best Mortgage Rate
By: Charlie West | 22/12/2009Receiving the best mortgage rate is a topmost issue on everyone's mind whilst making an application for a home loan. There are various mortgage brokers who are prepared to grant you profitable packages. There are various mortgage brokers who can appear to demand less of you but have several unknown expenditures.
Take Advantage Of The Best Mortgage Brokers, Quotes And Fixed Rate Mortgage Rates
By: Charlie West | 22/12/2009Acquiring the best mortgage rate is a topmost on everyone's mind whilst applying for a home loan. There are many mortgage brokers who are eager to provide you profitable offers. There are some mortgage brokers who will seem to charge you less however have some unknown outlays.
Looking For Best Mortgage Brokers, Quotes And Rates Available
By: Charlie West | 22/12/2009Whilst looking for the best mortgage rate, it's only usual that the primary factor you need to worry yourself with is the mortgage rates. Other than that, getting the best mortgage rate is knowing what is the interest rate of your home mortgage.
Methods To Locate The Best Mortgage Rate
By: Charlie West | 22/12/2009Gaining the best mortgage rate is the topmost on everybody's mind while applying for a mortgage. There are various mortgage brokers who are ready to provide you rewarding offers. There are particular mortgage brokers who may give the impression to charge you less but have many concealed payments.
Best Mortgage Rates - Attaining All Rate Points
By: Charlie West | 22/12/2009When searching for the best mortgage rate, it is only usual that the primary factor you need to concern yourself with is the home loan rates. Except for that, obtaining the best mortgage rate is understanding the interest rate of your home mortgage.
How to Find the Best Faxless Payday Loans
By: David Roberts | 17/06/2008 | LoansNot all faxless payday loan lenders are created equal. This article describes a faxless payday loan, and then describes how to find the best alternatives.
Are Payday Loan Companies Money Hungry Charlatans?
By: David Roberts | 13/06/2008 | Personal FinancePayday loan companies are often vilified in the press as taking advantage of the helpless. New studies, however, find that the cost of making a short term loan likely justify the price.
20 Easy Ways to Save Money on Gas
By: David Roberts | 25/05/2008 | CarsWith gas prices higher than ever, improving gas mileage and reducing what you pay at the pump has never been more important. So here are 20 easy tips to help you spend less money at the pump.