Payday loan industry facing tighter regulations


THE PAY DAY LOAN INDUSTRY IS EXPECTING MAJOR LOSSES BECAUSE THE CONSUME4R FINANCIAL PROTECTION BUREAU IS PUTTING IN PLACE NEW REGULATIONS… WHICH INCLUDE MAKING IT HARDER FOR LENDERS TO REFINANCE BORROWER’S LOANS. VALLEY NEWS TEAM’S CORNELIUS HOCKER SPOKE TO AN ACCOUNTING PROFESSOR WHO SAYS THIS IS THE RIGHT MOVE TO PROTECT AN ALREADY VULNERABLE POPULATION OF PEOPLE. “CONSUMERS ARE OFTEN GETTING INTO THE CYCLE OF A DEBT CYCLE.” ACCOUNTING PROFESSOR MICHAEL PETERSON SAYS IT’S GOOD THAT A FEDERAL AGENCY IS STEPPING IN TO HELP PEOPLE THAT ARE DROWNING IN DEBT BECAUSE OF PAY DAY LOANS. “OVER A PERIOD OF TIME, YOU’VE GOTTEN YOURSELF IN A ROUTINE WHERE THEY PAYDAY LOAN ITSELF IS YOUR SOURCE OF MONEY AND THEN THE PAYCHECK JUST PAYS BACK THE PAYDAY LOAN, PLUS THE INTEREST.” LEAVING THE CONSUMER WITH LITTLE TO NO SPENDING MONEY. FEES VARY FROM PLACE TO PLACE, BUT PETERSON SAYS YOU’RE GETTING THE SHAFT NO MATTER WHERE YOU BORROW. “BROKEN DOWN IN A SMALL CHUNK IT SEEMS MANAGEABLE, BUT IF YOU ANNUALIZE THE INTEREST AMOUNTS THEY’RE TYPICALLY MUCH, MUCH HIGHER THAN A TYPICAL BANK LOAN WOULD BE.” “I TALKED TO SEVERAL PAYDAY LOAN LENDERS. NONE OF THEM WILLING TO SPEAK ON CAMERA. HOWEVER, THE GENERAL CONSENSUS WAS THEY WISH THE FEDERAL GOVERNMENT WOULD STAY OUT OF PRIVATE BUSINESSES.” “EVEN THOUGH THIS IS A PRIVATE BUSINESS AND THIS IS SOMETHING THAT AN INDIVIDUAL CONSUMERS CHOICE TO DO, MANY TIMES WE PUT INTO PLACE RULES OR LAWS TO PROTECT INDIVIDUALS THAT MAY NOT MAKE THE RIGHT CHOICE.” CORNELIUS HOCKER. VALLEY NEWS LIVE. THE NEW GUIDELINES DO NOT NEED CONGRESSIONAL APPROVAL TO TAKE EFFECT, WHICH COULD HAPPEN AS SOON AS NEXT YEAR.

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