The Issue of Payday Loans

1840 WordsJul 13, 20188 Pages
One cold morning Sam Black woke up with aching chest pain. Troubled by this new condition he went to see his Heart Doctor. Little did Sam know that hours later he would be lying on the operating table in route for a triple bypass surgery. The surgery went as planned, but it was not the last of them. Sam was sent to many specialists and rehabilitation centers, building a large bill, which they had no money to pay them with. He still pays several grand a year for the medication he is prescribed. Years after the operation Sam and his wife, Elsie, have narrowly escaped foreclose, however the most problematic debt they have is the hundreds of small term loans with interest rates in the triple digits. Elsie once said in an interview regarding…show more content…
These companies were highly concentrated in the south due to loose regulation practices and began to travel west. Now it is a massive industry that ranges from small businesses to large corporations. At the top of this industry is Advance America, a national chain that made 4 billion dollars off the interest on roughly 400-dollar loans (Wright, 2011). This seemingly helpful practice has been the victim of a lot of scrutiny as of late. This has caused a shift in the regulations among these companies. Regulations are state mandated and done so according to the demographic region of the company. Since the regulation occurs at state level. That said the states that do permit these loans regulate the many aspects of the loan, avoiding mistreatment of the borrowers. In most states the borrower must make at least 1,000 dollars (full-time at minimum wage) and be employed by the same employer for a consecutive 3 months. This ensures that the borrower has a source of income and can pay back their loans. As a result of some states not permitting this type of loan, many people find themselves driving across state lines in order to receive a loan. State regulations do provide support, but the negative effects of lending companies are increasing. Debt is among the greatest challenges we face today, personally and as a country. More and more people are falling into this growing problem. Payday loan companies exploit this problem. Even though the loan amounts are relatively low, the
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