Missouri is working on a new bill through their state’s legislature which will argue that interest rate caps need to be placed on the payday loans online industry. This bill which is supported by many faith-based groups also includes raising tobacco taxes and increases the minimum wage.
Enough signatures were raised in order to add the payday loan interest cap to the bill. The faith-based groups have concerns that the payday loans online business is causing problems for the low-income neighborhoods. Right now, Missouri short-term loans can come with an annual interest rate of more than 400$. The faith-based groups are calling it a “sin”.
Of course, payday loan businesses within the state have tried to keep the bill from passing, but so far, have not given enough argumentative proof which would get it denied.
News from another state shows Delaware passing a law which limits how many “instant loans” can be taken out at once. Prior to this bill, there were no regulation limits on these loans. There is also going to be a cap on how many a customer can take out in a year. These instant loans are also known as payday loans. Spotya! payday loans online already have their own limitations within application qualifications. Spotya.com will not approve payday loans online if there are already two or more loans outstanding. Responsible lending practices before regulations!
There are thirteen states that have already banned payday loans online lenders from doing business with residents. There are twenty-one states that ban rollovers of these short-term loans.
Do state regulations help protect residents from payday loans online?
There are drawbacks to all of these rules and regulations. As much as the state governments are trying to help their residents, they are creating future problems for others. In the states which have banned the loans, residents can still get payday loans online by finding lenders from out of the country or ones run by Native American tribes. These lenders do not follow state regulations at all. What does this mean to those who want to apply for a loan? It means they can! Because there are no regulations, the loan amounts, fees and interest rates are not capped. People who obtain loans from these unregulated companies and cannot pay them off will not even have the protection from the Fair Debt Practices Collections Act. It is against the law to harass or threaten when collecting on a loan, but not for those who are not regulated by government policies. Banning payday loans online will keep residents from getting loans from companies who must follow the rules which govern the industry. The states may be protecting some, but if a resident truly wants a loan, there will be ways to get one which can do more damage to their finances. In order for states to truly protect their residents, there needs to be regulations for responsible borrowing as well.
Creating caps for fees and interest protects customers from doing business with a company who preys would prey on their need for fast cash. Even with regulations, a borrower may shop around and find a company with the competitive rates.
