Loan Proposal For Payday Loans

The main problem that most critics have with payday lenders is that many people recycle their loans and become trapped in cycles of debt. Some people use the loans irresponsibly or get loans from multiple lenders to buy things that they don't need or to enable unhealthy personal habits. These loans were never intended to be used in these ways, so some people get in trouble. The same holds true for all kinds of

Because of this nasty lending cycle, payday lending is illegal in 15 states, and is regulated elsewhere. In some states, borrowers are only allowed to take out a specific number of loans per year. In other states borrowers can only take out a specified number of loans at a time, and after a certain length of time the lender must lower the interest and extend the term so the borrower can get out of debt.

Description: Payday loan is the type of loan which is generally taken by the borrower at the time of emergency.

The purpose of this report is to inform you, the RSGs, about how the ethics of payday loans should be considered before moving on with your project. After you raised many concerns about whether or not ethics are an issue, Vice President Bette Davis decided to bring the CRC in to help out here. Davis wanted me to research the issue of the ethics of payday loans, and report back to her on with the information I found in order to help her decide how to resolve the issues between the RSGs. I first wrote a memo to Davis on how the CRC could help with doing the research and writing the report. I then wrote an annotated bibliography to Davis explaining the sources that I would be using and how they would be beneficial in the final report. I then presented to you about how this would help you resolve your issues. After you approved of what I had to say, I wrote an outline for the final report and submitted it to Davis. After completing all of my research, I have come to my conclusion and will inform you about it in this report. It will help you to come to a consensus on whether or not the ethics of payday loans are an issue.

In the article “Me, The Other Scott, And Payday Loans” by Scott Gilmore, the author is furious to find that most people are being drained out of money they don’t have. In my opinion, I agree with the author. I do not think it is right for Payday loans to be tricking people with little to no assets to pay for an amount they cannot pay back. According to the article, annual percentage rate is more than 540, while loan sharks charge double that. Loan sharks will gladly extend the loan for two more weeks, that way they can charge more interest rate. Stan Keyes, the president of the Canadian Payday association argues that “It is unfair to calculate the interest rate this way, since the loans are typically for two weeks. However he concedes that

Direct lenders do not favor one or the other. They favor applicants who have the income capable of handling the short-term debt. Since there is no credit check, these lenders are unaware of what other bills you have and this factor can in turn cause problems for both borrower and lender. As easy as it is to blame a direct payday loan lender for taking advantage of the vulnerable, the borrower must also be blamed for not accepting a rejection from a responsible lender. If you keep trying, eventually you will find a predatory lender willing to accept your application. Think twice before you run out of food money, maybe there are some other costs you can cut back on so you don't hurt your financial situation

Unlike in the past when we have tried to influence legislators, we would target borrower stories toward the public. This strategy would start with ad campaigns of our consumers explaining how payday lending was their only choice and helped them provide food, water, and housing for themselves and their families in times of need. Eventually, we would shift the campaign to social media with the goal of personalizing payday lending for Ohio residents. We know that over one in ten adults in Ohio use payday loans and have positive experiences, but many in the public do not recognize this. If someone’s cousin, neighbor, or friend were to share their experience it would be significantly more likely to sway opinions than just another ad from “rich” payday lenders.

Americans who need a short term loan to repair a car, fly quickly to a stick relative beside or catch up on child care payments even find themselves going to payday lenders ether online or trough one of the thousands of payday lending store fronts. (Wherry) using online is a way to pay or catch up with your due date of the payment that you owe. Having someone that can help you with a payment is a payday lender that can help you with a car payment also paying your rent or buying food or also buying a new sofa. Nationally borrowers spend roughly 8.7 billion per year on payday loans fees and what might start as a 500 lifetime can become a heavily burden. (Wherry) having a borrower that lend you a loan can be easy but it’s time to payback that is when it became complicated. Also having a fee is very complicated because they pressure you to pay back when you miss your due date. Annual interest rates for payday loans typically run between 391 and 351 percent a cording to the center for responsible lending and most people who use them end up paying more in fees over the course of the year than they originally received credit. (Wherry) annual rates are very high in percentage because of lending tem money and not paying back on the due date. Having these huge percentages are too much but when you borrow more than you need the more you ending up paying than the last

In the newspaper article, Me the Other Scott and Payday loans, Scott voices his opinion that payday outlet companies are on the edge of committing fraud. Payday Loan companies constantly feed off of those families living with low to middle income, who can barely afford continuous asset payments, leading to advance payday loans being the only possible resort. Payday loaners are just skimming legality lines when over charging interest rates to those who are in desperate need. Those who have no other choice eventually have to pay off the loan plus an additional cost to borrowing the loan in the first place, falling into a continuous cycle of debt. The government sets up those living in lower to mid income to be trapped in a never ending cycle

The article “Payday Loans”, written by Scott Gilmore express his opinion on payday loan interest rates. His beliefs are that the interest rate is extremely high for people in society. After considering all Gilmore’s points placed in his opinionated article, I can grasp that I share the same opinion as him. The interest rate is too high for people and there should be a cap put in place by the government. With regulations put in by the government, it is believed to benefit society in which is considered still high. The government believes that an annual percentage rate of 540 is reasonable for everyday working people. In fact the newly in placed interest rate is double the amount charged from loan sharks.

Financial regulators and politically motivated critics of bad credit loans have proposed many regulations that target payday-style loans such as requiring greater due diligence in processing the loans, limiting interest rates and simply banning the loans in certain states. However, the government's own Federal Deposit Insurance Corporation released a national study in October of 2014 that found about 34 million households don't participate in the banking system. These people depend on alternative financial resources like check cashing companies, bad credit loans and payday and title loan

In my opinion, I believe that loans are good for people who can borrow money and pay the company back as soon as possible. Those who do not pay them back receive an increase in interest every time they miss a payment. Targeting people who have a low to moderate income, payday loan companies are in the areas that these individuals live in. As Gilmore says, “A recent study by St.Michael’s Hospital in Toronto found a correlation between the number of payday lenders in a neighbourhood and premature mortality”. To avoid falling behind on payments, young people can seek for help to reduce stress. In conclusion, I think that

Guo does a good job at getting the audience to quickly take his side against payday lending by calling payday lenders “slippery” (Guo) and by stating that borrowers of payday loans typically use the loans as a “last resort” (Guo). Guo strengthens the audiences mistrust of payday lenders in the third paragraph giving brief details of a New York Times article in which the Consumer Finance Protection Bureau states that they will be proposing a “national set of rules to better regulate the industry” (Guo). specifically tightening the standards as well as restrictions on the number of times a loan can be rolled over. Guo’s evidence is from a credible source, The New York Times, however the credibility of Guo’s article comes into question when he could have googled the proposal and found it on the CFPB, or Consumer Finance Protection Bureau website, as it is the second link that pops up when searched. The proposal details as listed on the CFPB website goes into far more detail as to what is actually happening to borrowers and the actual regulations being considered than the Times article.

Payday loan companies, by definition, act as profitable organizations. The main goal for any profitable organization is the growth of profit and enterprise. Evidently, the target market for these businesses are lower income consumers with minimal assets. In Canada, the population of low income citizens accounts for a majority percentage in comparison to the middle and higher income class. Payday loans seek business from impoverished individuals and communities simply because they are a large untapped financial market.

Its not uncommon that many people encounter needing money before their next pay check. Pay day loan companies are businesses that will front your paycheck, but are combined with absurd interest rates of up to one hundred percent. This means that by the time you do get paid, you actually owe more money than you have. How does one recover from this without outside help, or crime? The cycle of trying to pay of debt, with money you don’t have is a recipe for