Don’t think all those laws regulating payday loans are having an impact on payday lenders? Think again. With a growing number of state legislatures passing new laws regulating the way payday lenders can loan direct deposit money, it’s getting more difficult for these companies to make solid profits. Of course, not many people will feel too sorry for the companies that originate payday loans. These lenders have a bad reputation for charging customers exorbitant fees and outrageous interest rates. Payday lenders don’t exactly make for sympathetic victims. This doesn’t change the fact, though, that many consumers rely on their short-term loans to make it to their next paycheck. If states legislate these companies out of business, it will put additional pressure on these already struggling consumers.
Suffering In Washington, South Carolina
The Kansas Weekly Journal recently ran a story about the drop in revenues that lender MR Woldings, based in Overland, Kansas, has suffered because of new payday lending laws in Washington and South Carolina. According to the story, the company’s revenues in those states were cut nearly in half. Overall, MR Woldings notched revenue of $38.8 million for the first quarter of the year. That compares with $42.5 million for the first quarter of 2019. MR, of course, is far from alone; many payday lenders are struggling to navigate the new payday lending laws that are popping up on a seemingly daily basis across the United States.
The laws do have a purpose, though. Legislators have enacted them to protect desperate consumers from high interest rates and fees. This is a worthwhile goal. However, there is a risk in legislating payday lenders too severely. These companies, and the 24h. payday loans they originate, serve as safety nets to many struggling consumers. The companies have become even more important as the national economy continues to slump and unemployment levels remain too high. Many consumers have seen their annual incomes plummet during the days of the Great Recession. For many of these individuals, payday loans are the only way to keep the lights on and the rent paid.
Not Ideal, But Necessary
Payday lenders are an easy target for politicians. They can rail against the high rates they charge. They can accuse them of targeting the poor and the desperate. But no matter how much they bluster, politicians can’t argue that the payday loan hasn’t become a necessity for a growing number of people. Without these loans, desperate consumers will fall into even deeper financial straits. And until the national economy’s recovery brings more jobs to the United States, this isn’t going to change.