Hard working American consumers often find themselves in need of loans. Emergency expenses can happen to anyone at any time. People who do not have a lot of money saved up or great credit scores often choose to get payday loans online or via a local lending location. Payday advance loans are often used to help pay for things, like car repairs, medical bills or even to purchase groceries. Like any other type of loan, when consumers take out payday loans online there are fees to pay.
Some, like the Consumer Financial Protection Bureau (CFPB), believe that the companies that offer payday loans online and at local lending establishments charge fees that are too high. As a matter of fact, the CFPB has created some new restrictions that they want to impose on the providers of payday loans online. It is possible that these proposed restrictions could devastate payday loans online lenders across the country.
Critics of the companies that offer payday loans online or at brick and mortar locations believe that these types of loans take advantage of lower income borrowers. These critics allege that the fees that payday loan lenders charge are too much for the relatively small amounts of money that borrowers typically get. People who regularly take out payday loans online, however, are usually not too concerned with the fees they have to pay, as they often have no other lending options to choose from.
At the end of the day, the CFPB is on a mission to do what it can to wipe out the providers of payday loans online. In June of 2016 the CFPB proposed a rule that would require lending companies to do extensive customer research to make sure that potential borrowers would be able to pay back their loans. The CFPB’s proposal also includes provisions that would prevent people from taking out payday loans online too often. The proposed rules could cause serious repercussions to companies that offer loans at store locations, payday loans online and even title loan companies. It is possible that the new CFPB rules could become law by the end of 2017.
Richard Cordray is the CFPB’s Director. He stated, “The Consumer Bureau is proposing strong protections aimed at ending payday debt traps. Too many borrowers seeking a short-term cash fix are saddled with loans they cannot afford and sink into long-term debt.”
Companies that Provide Payday Loans Online are Fighting Back
The companies that offer services via neighborhood lending locations and that provide payday loans online are understandably worried about the future of their businesses. These lenders believe that they offer important services to an often overlooked segment of American consumers. These lenders believe that if people cannot get loans locally or via payday loans online websites that the future for these consumers will be rather bleak.
Dennis Shaul is the CEO of Community Financial Services Association of America. When asked about the new rules aimed at the payday loans online lenders and other short term lending companies, he said, “By the bureau’s own estimates this rule will eliminate 84 percent of loan volume thereby creating financial havoc in communities across the country. Thousands of lenders, especially small businesses, will be forced to shutter their doors, lay off employees, and leave communities that already have too few options for financial services.”
It is clear that the CFPB hopes to eliminate the ability for people to get cash advance loans at local lending locations or to take out payday loans online. If the proposed rules go through, millions of American households may wind up with little to no hope at all when they run short on cash and have to pay for any type of emergency or un-budgeted expense.