Should Online Payday Lending Be Regulated?

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Should Online Payday Lending Be More Closely Regulated?

Should Online Payday Lending Be More Closely Regulated?
Payday loans generate lots of controversy because they 're offered to people who have bad credit or limited credit histories, which makes them high-risk borrowers. Traditional lenders seldom approve loans for these types of borrowers and never quickly enough when a cash emergency occurs. Unfortunately, many of these same people don 't use payday loans as intended -- as short-term emergency loans just until their next paydays -- so they become trapped in a cycle of debt. Well-meaning consumer activists, politically motivated legislators and establishment figures from the traditional banking industry band together to push for reforms to regulate payday and other short-term loans more closely.

Both sides of the controversy make some valid points, according to an LA Times article. Some short-term lenders do use deceptive advertising and target financially unsophisticated borrowers to trap them in debt cycles where interest rates average annual percentage rates of 400 percent or more. Of course, traditional lenders also target people who have the best credit and offer them introductory deals on credit cards. Check any middle-class group in the United States, and the chances are that most of these families juggle a mountain of debt for mortgages, credit cards, car loans and student educational loans. Even though these loans carry lower interest rates, they can be just

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