Understanding the ground reality for borrowers
Philadelphia, PA -- (SBWIRE) -- 03/07/2016 -- Since the bill for lending practices was signed by the governor of Wisconsin, reports suggest that the payday loans have drastically decreased in numbers. They seem to have also gone down in their overall value, but does that mean the bill has been successful in preventing the practices of the lenders?
The unfortunate answer to that question is a No. All it actually means is that the payday loan companies have devised newer ways to get around the law and do exactly what they have been doing till then. They have made the most out of the loophole in the bill to keep charging heavy interests on lending money to unsuspecting borrowers while staying away from the watch of the state authorities as well.
The primary loophole in the bill was the definition of payday loan itself. According to the bill, only the loans for which a post-dated check or access to electronic funds transfer were given, were considered payday loans. Eventually the definition was changed and loans that were issued for a period of less than 90 days were classified as payday loans.
According to the bill, number of loans a customer could get to repay the original debt, were restricted and a cap was put on the amount of the loan. While the initial interested rate wasn't capped, there was a cap of 2.75% interest on outstanding amount of loan left unpaid by the consumer. All this amounted to serious loopholes that could be easily exploited by lenders to their advantage.
What the bill did is that it stopped classifying many high interest loans as payday loans. The lenders on the other hand made some changes to the terms of the loans they were offering to get around the law. Thankfully, there are payday loan companies that are above board and doing their best to keep up with the regulations. Their goal is to build a network of responsible payday lending, and offer financial backing to users from lower income groups.
Users can look for such lenders online and save themselves trouble. They can come across direct payday lenders and payday loan affiliates, who can match them with ideal lenders online. Working with them can be a smart decision for users.
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