In many states, most notably New Mexico, New York, and Texas, there is a movement to limit or stop you from having the option of using a payday loan to pay for emergency or other needs. While no one reasonable is saying (with the possible exception of the loan companies) that there shouldn’t be some reasonable limits on how much interest they can charge and other peripheral issues, outright taking away the option could be hurtful to many people.
Let us say first of all that we know that our political leaders, for the most part, are trying to do what they believe is in your best interest. We get that. There are some people who, either because of their own poor choices or an unscrupulous lender, have become really tangled up in short term loans. We’re not contesting the need for reasonable measures aimed at helping such people.
Many states, Michigan being a notable example, have safety nets in place by which someone who finds themselves over their heads with payday loans, can pay the loans back over 3 months or more. This limits their ability to use short term loans for a while, but in general it helps them out of a bad situation. These kinds of programs are a good idea.
But what about states that are considering (or already have) eliminating the option of payday loans? What happens to the people of those states if their car breaks down and they don’t have the money to get it fixed? If they have poor credit, this eliminates their best way of getting to work and earning money. And if they can’t do that, how can they fix their credit? While payday loans do end up in a vicious circle for some, not allowing them can also be a bit of a Catch-22.
If you want to keep this option open for yourself and others, you need to let your voice be heard. Call or write your Senators and Congressmen and let them know what you think about it. And when you do, suggest that common sense regulations would make more sense than an outright ban. Otherwise, things could get even tougher for the people who genuinely need an occasional advance on their paycheck.