Center for Responsible Lending has new report on payday loans

True to form, the Center for Responsible Lending has released a new report bashing pay day loans. The CRL is among the chief lobbyists against the payday lending industry, though it allies itself with other consumer credit causes. Payday lending, along with other credit products, will soon fall under the heading of the Consumer Financial Protection Bureau when it begins operating in a few months.

Loan companies in treble

Payday lending is often reviled as predatory, as opponents accuse personal loan companies of trapping people into vicious cycles of debt. If the practice were to disappear, it would make the Center for Responsible Lending quite happy. This is an advocacy group for consumers. Daily Finance states a new report on payday lending was released by the organization that said individuals tend to get into debt for more than just one pay period when taking out payday loans. The report is titled “Payday Loans Inc: Short on Credit, Long on Debt” and is available on the CRL’s website.

Lawsuits

Most payday lenders have to deal with lots of criticism. There tends to be a lot of regulation for them too. Some loan providers deserve it; the number of violations committed by personal loan companies as well as the number of lawsuits including class actions show that not all short term installment loans lenders are on the level. Even though interest rates cannot be controlled by the Consumer Financial Protection Bureau, many hopes the CFPB will put on a cap this year after coming into impact. The Consumer Financial Protection Bureau should not do something like this, according to the CRL.

Risk of credit

There is a lot of scholarly literature on credit products such as pay day loans. Apparently, it is common, after a consumer starts borrowing, to get into a lot of debt. For instance, the CRL report asserts that several people are indebted to a payday lender for one to two years. That’s better than 30 years, the length of the typical mortgage. That is also better than 10 years, the length of time that people are given to repay student loans. However, those debts do not have the stigma that payday advance have been bestowed with. Even though a person could be indebted to a charge card business for years and years, most people do not look badly at credit cards either.

Citations

Daily Finance

dailyfinance.com/story/credit/payday-loans-exposed-short-term-lenders-borrowers/19898661/

Responsible Lending

responsiblelending.org/payday-lending/research-analysis/payday-loan-inc.pdf