People are strapped for cash these days and with banks becoming increasingly stringent on giving out loans, more people are turning to payday loans for help. They offer quick cash with often very little hassle in terms of application and receipt of the loan. The terms of such loans are vague and often down played by the lender. The truth is, many people may not realize the terms of their loan and if they fail to meet the repayment terms they could face negative consequences. It isn’t uncommon for a person who defaulted on a payday loan to end up with enormous interest fee payments, damaged credit, losing the property they put up as collateral or having their wages garnished. With payday loan lenders on nearly every corner, the government has become increasingly aware of the need for more regulation with the payday and auto title lending industry.
Senate Seeks To Protect Consumers
A new Senate bill was approved last week providing more rules for payday loan lenders. The bill would require lenders to post their interest rates, fees and the terms of service. In other words, lenders would not be allowed to hide crucial information about the loans and, instead, must make each consumer aware of the conditions of the loan they are receiving. The new bill will require lenders to prominently display the disclosure of the loan and post consumer contact information for the state consumer credit commissioner. Lenders will also be responsible for ensuring the consumer understands that the nature of a payday loan is meant to provide relief from a short-term financial situation, not a long term hardship. The bill was approved and many consumer protection agencies, as well as industry moguls, are also supporting the bill.