No Fax Payday Loans And Legislative Reform
A number of payday loan legislative initiatives are currently being considered in a number of States. Payday lending and other financial issues are hot topics during big election years. A number of the initiatives may affect whether folks can easily obtain a no fax payday loan over the Internet.
For example, a bill introduced by in the State of Ohio by Reps. Batchelder and Hagan is intended to cap “unreasonable” rates. If the bill were passed, payday loans in Ohio would have fees of no more than $1.50 for every $100 loaned. The sponsors of the legislation argue that an “efficient business” could still operate profitably under such a cap. Those who are familiar with payday loan operations realize this is impossible. Payday lenders are able to offer loans only if they are able to make a profit. A payday lender faces substantial overhead and costs in underwriting each loan and, at rates of less than $10 per $100, the economics just don’t work out.
The free market regulates price. If a business could make a profit at lower rates, then there would be more rate competition. Thats the way a market economy works — businesses reduce prices to get more customers and market share. However, businesses can’t reduce prices to a point where the business is not profitable. Imposing low fees on payday lenders will effectively put an end to the industry. If that were to happen, what alternative would borrowers have?
Discussion Area - Leave a Comment