Payday Cash Advances Meet Regulatory Tests, Serve Growing Market
State by state, legislators have wrestled with the growing phenomenon of online payday cash advance loans. Where once borrowers who needed a short-term loan would trek down to a cash advances store, online payday loans companies are now making the service significantly easier and more accessible.
And with online ease and access comes a larger, younger and more financially savvy borrowing market.
It didn’t hurt that a stressed economy happened at the same time as the technological advancement and consumer-friendliness of online lending sites. Many two-income households are now one-income units, and as such the bill paying has become naturally more challenged. When that one paycheck fails to stretch to the end of the pay period, the sole breadwinner has the option of borrowing against the next paycheck.
Traditional lenders cry foul, but their complaints are disingenuous. A review of the industry by none other than National Public Radio in 2010 found that credit card companies and banks haven’t developed a product that serves this market segment, and that it at most supplants the neighborhood loan shark, a completely unregulated entity. This payday cash advance loan industry basically provides loans where they are sorely needed, and compared to 29% interest rates (as charged by major credit card issuers) payday cash advances can be a cheaper loan.
Different lenders offer different loan packages and terms. Some of the limits and fees are established by state regulations, while other features are at the discretion of the lender. An aggregator that matches borrowers with ideal lenders is The Payday Place (http://www.thepaydayplace.com).
States have largely responded by allowing legitimate cash advances companies to continue operating, providing short-term cash to borrowers who request it. Requirements generally are that the borrower by 18 years of age, employed at least one month in their jobs and that they have no outstanding loans with the lender before getting a second cash advance. Recipients of disability or spousal support (alimony) checks are eligible as well.
Only registered users may post comments.