Customers have made certain that same day personal loans are in "tremendous demand," claims FDIC chair Sheila Bair. They’re in interest in consumers, and for banks and credit unions, even if such organizations have been unsuccessful in offering the goods to these customers. Banks have tried to get in on the same day loans origination action – but not without complications, claims a GAO report.
Places other than banks to get cash advance alternatives
There are very different fees and terms required for payday cash advance alternatives that come from credit unions and banks. Because of this, they vary quite a bit from small lending outlet same day personal loans. Banks may not like what the GAO has done to try and explain the Dodd-Frank Act and FDIC changes have helped the willingness of banks to give out payday loans:
“Recent statutory and regulatory changes and FDIC initiatives may encourage more institutions to offer small-dollar loan alternatives to payday loans or expand their availability, but many consumers may still chose to use payday loans for their wide availability and relative lack of eligibility,” says the GAO report.
A two-year FDIC pilot program illustrated that without the involvement of charitable organizations or government subsidies, banks and credit unions have been unable to popularize cash advance alternatives. The consumer base for personal loans was excluded in the requirements for underwriting as well.
Use payday advance without concern of losing a job
The notion that taking out same day loans is harmful to one’s financial reputation is disproved in the GAO report. Federal agencies like the Department of Homeland Security, TSA and even the Federal Bureau of Investigations put applicants through an intense employment screening process that contains a thorough financial history. Credit reports are run and other financial evaluation tools are used.
The hiring process was not affected by short term installment loan use when deciding on high security clearance positions, the GAO explained. The point of this is to make sure there are no risky behavior patterns going on. Government employees have to show stability. If banks and credit unions could ever free themselves from the policy maze and judge same day loan applicants over a more broad range of financial responsibility, perhaps the institutions could sell personal loans directly to consumers.
Citations
Community Financial Services Association of America
cfsaa.com/about-the-payday-industry/myth-vs.-reality.aspx
Government Accountability Office
gao.gov/highlights/d11147high.pdf
Don’t live beyond your means, even with payday loans
youtube.com/watch?v=KjZBOCAgR64
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