NEWS: Payday Advance Lenders Face Legislation

Even if you have never utilized their services, you have surely heard them shilling their business on TV and radio ads: payday lenders, as these merchants are called, offer short-term loans against your normal paychecks. It may sound like a quick fix to a cash-on-hand shortage, but many are facing shocking repercussions from their trip to these businesses: tacked-on interest to the tune of 400-900% a year. Of course, many of these lenders will only give you 6-12 weeks to pay off your loan, but, by the end, you may find that you are paying $120 interest on a $100 loan.

Predatory payday lending is nothing new – such consumer horror stories as the hypothetical scenario above are the reason why 43 of 50 US states have imposed caps on the interest rates that can be set by such lenders. What that really means, is that 7 states (including Utah, where a leading daily newspaper recently published a report on this kind of "legalized loan sharking") are still subject to the lure of these lenders, who entice the down-and-out with their ubiquitous advertisements and friendly attitudes. The average customer of a payday lender is supposedly $40,000 annually, but it isn't the middle class that are finding themselves ensnared by the payday loan trap – it's those struggling to make ends meet that turn to these establishments for a quick fix to their bills and creditors, and find themselves in way over their heads when the time for payback comes around. Utah in particular is now looking into joining the majority of states by setting an interest cap to protect consumers from such predatory lending.


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