A new law that has been written into
the books this year may interfere with the ability of many to get emergency
funds by limiting access to payday loans across the state of Washington. The
law which officially took effect January 1, 2010, has already received some
seriously mixed reviews from both sides of the debate. Many are wondering
whether the new legislation, which drastically affects the payday loans
industry in the state, will be helpful or if it will be a hindrance for both
the borrowers and lenders who rely on such services on a regular basis.
Legislation began as a result of
years of bitter fighting between the payday loans industry and consumer
advocate groups who were concerned about the potential risk for abuse and
dependency from borrowers and loaners alike. The main idea is to set strict
limits on what consumers can borrow and provide them with more payment options.
The objective of the new law is to encourage borrowers to step up and take more
responsibility for their monthly budget and get their debt under control. What
lawmakers fail to take into account is that many consumers honestly need the
money and feel the sting of the recent legislation. Lawmakers shouldn't have
the right to tell people how they spend their own money. It isn't the
government's place to baby sit people after all.
The new law requires payday lenders
to be more lenient on receiving payment by forcing them to provide a payment
plan rather than requiring to be paid in a one lump sum. Unfortunately for
consumers, the new law severely limits the amount of money a person can borrow
and places a cap on the number of payday loans one can take out in a given
year. The new limit makes it so that loaners cannot provide consumers with a
loan that exceeds either $700 or 30% of their total monthly income before
expenses, whichever amounts to more. It will also require a database to be
setup that requires all loans to be reported and recorded by the state to make
sure that no one is taking advantage of the system. That means less privacy for
everyone.
The bill has so far been met with
much disdain from the industry itself as many claim that it will not only
undercut their business, but may even force many payday loans businesses to
close their doors permanently. This is due in part to the fact that a large
part of the payday loans industry relies on consistent borrowers who offer
return business for such establishments. It's been initially estimated that the
new laws could cost the industry as much as $100 million in revenue from fees
within the first year. This could seriously cripple an industry that has seen
monumental growth since it first began to really thrive in the nineties.
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