Cash Advance: A Closer Look at Payday Loan Issues

Different people have different opinions, especially when it comes to payday loan businesses. To some, a payday loan company is the best thing that happened since sliced bread, because it gave individuals a quick, albeit temporary solution during emergencies. For others, these firms are nothing more than plain loan sharks because they see them as exploitative groups out to extort people.

As payday loan lenders continue to be a hot topic, more people will debate whether these companies should stay in business or not. Debates will go on, but a closer look at payday businesses and outstanding issues should at least shed light on the matter. The following are concerns regarding payday businesses and their counter-arguments.

It burdens the poor

Many advocates against cash advance or payday loans say that companies abuse poor people. What these critics fail to say is that payday borrowers have bank accounts that poor people can’t have access to in the first place. At most, borrowers are only ‘financially strained’, with a decent amount of steady income, not the poor.

It promotes dependence

Most cash advances payday loans critics see payday loans as highly addictive. Payday loan companies argue that the term ‘addiction’ doesn’t fit because it is a health issue and that people who borrow don’t have to borrow simply because they can’t help but do so. Getting money from a payday lender is a choice, critics should also see that people have a choice whether to apply for a new loan or not.

It circumvents the law

Many cash advances payday loans companies already submitted themselves to state regulations. Places like North Carolina and New York, which sought the withdrawal of payday loan companies, have become successful at their goal because cash advance companies complied with the ruling. Other states like Arizona capped loans at 36% and payday lenders in this state complied to the policy.

It targets specific groups

Opponents of cash advances payday loans accuse the lenders of deliberately targeting minorities and military personnel. While there are many loan companies near minority neighborhoods and some military bases, this is just a natural strategy for any kind of business. Payday loan lenders just want to be where most of their market is to improve business.

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