Missouri is focusing on a new bill through their state's legislature arguing that caps on interest rates should be placed on the payday loans industry. This bill that many faith-based groups support includes increasing the minimum wage and raising the taxes placed on tobacco.
Enough signatures gathered warranted adding the payday loan interest cap on the bill. Faith-based groups are concerned that the online payday loan industry is causing trouble for low-income communities. At this time, Missouri short-term loans can include a yearly rate of interest in excess of $400 thus causing faith-based groups to deem this a "sin".
News from Delaware shows passing legislation which limits the number of "fast cash loans" that can be taken out at the same time. Before this bill, there were no regulation limits on these loans. There will also be a cap on the number a person may take out each year. Several states already follow stringent rules and regulations regarding these types of loans in an effort to promote responsible payday loans lending practices.
There are already thirteen states which have banned payday loans altogether denying lenders the option to loan in those states.You will find twenty-one states that prohibit rollovers of those short-term loans. A rollover gives the borrower the option to extend their loan payments.This can create a long-term debt problem with a loan that was intended to be short-term.
There are some disadvantages to all of these rules and regulations. Even though government authorities are attempting to help their citizens, they're creating future difficulties for others. In the states that have banned the loans, residents can continue to get payday loans online by finding lenders from outside the country or those run by Native American tribes. These lending companies don't follow regulations whatsoever. So what does this mean to those who want to obtain a loan? This means they are able to! Because there are no rules, the loan amounts, fees and rates of interest are not capped.
Those who obtain loans from these unregulated companies and can't pay them off will not have the security of the Fair Debt Practices Collections Act. It's illegal to harass or threaten when collecting payment on a loan, although not for those that aren't regulated by government policies. Banning payday loans online could keep people from getting loans from companies who are required to follow the guidelines which govern them. These states might be safeguarding some, but if someone truly wants a loan, there are always methods for getting one that can do more harm to their finances. To ensure that states can really safeguard their citizens, there should be rules for responsible borrowing too. Creating caps for fees and interest, safeguards customers from using the services of a business who may try to victimize their customers. Despite the regulations, a borrower may still shop around and find a company with the lowest rates.
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