Think of this – according to Consumer Financial Protection Bureau (CFPB), the median payday borrower is in debt to his payday lender 200 days of the year. And now CFPB wants to restrict high payday loans costs.
They say that this proposal is still under consideration. They want to attempt to restrict lenders from collecting payments from consumers’ bank accounts which tend to rack up big fees. This would apply to payday loans, deposit advance products, vehicle title loans, and some high-cost open-end loans and installment loans.
According to Pew Research, Americans think that unsecured money loans are unfair (but hey, no one is making anyone obtaining anything), but they would continue applying to it with reasonable percentage rate. According to Nick Bourke, American consumers of payday loans say that CFPB gave a good start, but they expect more regulations to be applied to make this market safer and more affordable.
About 12 million of Americans use this industry when they need quick money to borrow fast. Irresponsible borrowers (and the truth is that the majority of them are) end up spending $520 in fees to borrow $375. This is huge, but again how can payday lenders be responsible for people not having enough skills to manage their personal finance. You can make loans more affordable, but those who always were able to get into debts, would repeat this mistake over and over again. It is always easier to blame someone for your mistakes.
Alternatively, consumers suggest banks to step up and begin offering small loans.
Quick Solution – Long-Term Commitment
This is the case for most of Americans, but if you put aside your emotions and attitude, and think this thing through, you will see some fair points. They are:
- Fees can be ridiculously high, but if you pay on time, you won’t end up overpaying a fortune. So, it is up to your personal finance management.
- If you look up closely, a reputable payday lender will always suggest this kind of borrowing to be a last resort, meaning that if you have no other choice, then you can use this temporary solution. The keyword is “temporary” here.
- Most borrowers do not read Terms and Conditions. Well, too bad.
These are 3 key points that people refuse to understand. We all know that it is hard to admit personal mistakes. Like, for example, you can complaint about always being short on money. But have you ever tried looking for ways how to save money in August? Have you tried looking for apps for your cell phone that help planning a budget? Most likely, you have not. So, before complaining about everyone and everything around you, ask yourself: “What have I done today to make my life free from possible debts tomorrow?”
Only time will tell us if new restrictions by CFPB have a positive impact on consumers’ finance in general. In the meantime, no matter how badly you need cash try to be a responsible lender if you don’t want to go broke because of your own careless attitude.