Payday Loan Laws in the News

According to a recent article in Washington State’s News Tribune, legislators in the state of Washington are trying to establish ground-rules for safe payday loans while still recognizing the primary objective of helping responsible people who have hit a bump in their financial road. Many of those set against the no fax personal loan business misunderstand why annual percentage rates are set so high in the industry. As the article noted, the typical current rate can be 390 percent, which may sound astronomical if it was for a long-term loan. However, a no faxing personal loan is only meant to be a short-term solution. As the article noted, that annual percentage rate would result in a $15 charge on a $100 cash advance loan. With the new bill, a borrower who may be less than seven days from the receipt of their next paycheck can get a loan that is close to twice as long as the usual two-week no fax personal loan. However, this change does not satisfy certain interest groups out there that continue to ask for the rate to be reduced down to 36 percent. And, this drop in annual percentage rate may occur later in 2009 with President Obama’s support. It’s certainly not all that controversial to claim that consumers should have access to short-term financial assistance as long as it is used and regulated in a way that is responsible and fulfills a real need. Like the regulation occurring in the mortgage industry, too many laws can end up doing more harm than good. A good test of a reputable lender is if they are focused on providing consumer education so that clients and potential customers can make smarter money decisions.