Congress Critiques Payday Loans

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Pending congressional action would reduce a consumer's access to payday loans if the payday loan reform act becomes a law of the land. If this legislation passes, it may become harder for consumers to actually take out a loan ahead of receiving their paycheck. Some elected officials believe that consumers are not aware of the cost associated with a payday loan. Compared to other loan products like some credit cards, the cost of a payday loan is almost always higher. However, these days, not everyone can qualify for a credit card. Choosing to access funds by applying for a payday loan with a specialist payday loan company is a useful solution for many consumers.

The need for some extra cash for most us these days does not go away especially if the car unexpectedly breaks down or a child needs emergency medical attention. According to an April 14th Wall Street Journal article by Robert DeYoung, the data in a a January 2009 study at George Washington University reported that payday loan borrowers do indeed make informed choices before seeking a payday loan. Check out these findings:
about half of the 1,173 payday borrowers surveyed considered other credit alternatives first; such as bank, credit card or personal loans, before taking out a payday loan;
over 80% lacked sufficient funds in their bank accounts to meet their pending expenses, so by taking out a payday loan, they avoided expensive overdraft fees charged by the bank on their checking account;
close to 90% said they were very satisfied or somewhat satisfied with the payday loan transaction;
close to 90% said they were very satisfied or somewhat satisfied with the payday loan transaction;

Any Congressional action to control the payday loan industry will ultimately reduce the supply of payday loans available to consumers. That generally results in rising costs for the payday loan companies. Reputable short term lending specialists like payday loan companies will find it harder to stay operational to help consumers obtain payday loans.

Concerned consumers can feel free to contact their local Congressperson to let them know that although payday loans can be expensive, that they still fulfill a need in a free market economy. Visit the house.gov web site to easily find the correct telephone number and email address of your local Congressperson. As part of his or her constituency, you have a right to express your perspective to your Congressperson.


About the Author:
Nathan Randall, editor, DailyDollar Newsletter provides free daily advice on money matters plus coupons and discount codes. FYI...you can now access the DailyDollar Newsletter via iTunes podcast, YouTube video, and on Facebook and Twitter too.



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