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How Payday Loans Are Helping Kansans

It’s unfortunate that I don’t get to see a lot of news items on how payday loans are doing consumers a lot of good.  More often than not, what we read in the newspapers are articles bashing payday loans and the payday loan industry as a whole.  That is why when I see something that support payday loans, I take a deep look at it and see where its coming from.  After all, we could all learn something from it.

I ran across this article from a Kansas online newspaper – it is actually a letter to the editor.  I know it is not from this side of the ocean, but anything that details the benefits of a payday loan is worth taking a look at, in my opinion.

Here are some excerpts of that letter.

By ignoring industry data and independent research, the Kansan’s April 9 editorial about payday lending was typically one-sided and misled readers.Responsible payday lenders have helped millions of Kansas families make ends meet when facing urgent, unexpected expenses such as auto repairs, medical expenses or unusually exorbitant bills.

Current Kansas law already includes some of the strongest consumer protections in the country. Limits on loan amounts and fees and a ban on loan renewals prevent customers from abusing the product and from experiencing the kinds of annualized percentage rates referenced by industry critics.

In fact, the vast majority of payday loan customers appreciate access to short-term credit and use the product responsibly, to cover unexpected, urgent expenses or to avoid other, more-onerous fees such as those associated with bounced checks, overdraft “protection” and late bill payments. More than 90 percent use the product responsibly and pay their loans off according to loan terms.

For the small minority who — for whatever reasons — find themselves unable to meet their loan obligations, members of the national association of payday lenders — the Community Financial Services Association — offer extended payment plans that provide any customer — at any time, for no charge — more time to pay off their loan. That’s free credit!

Banning the industry would deny Kansas consumers the right to make their own choices, limit their credit options and force many to risky and more costly options such as unregulated off-shore Internet lenders and bouncing checks.

Let’s give reasonable, hard-working Kansans access to a variety of regulated credit options and trust them to make financial decisions based on what’s best for them and their families.

This letter was written by Tom Linafelt, presumably a person who has benefited from payday loans at one point in his life.  I think that anyone who has had the chance to take out a payday loan and was able to deal with an urgent financial matter as a result would feel the same way.

I think the operative word here is RESPONSIBLE.  This would be applicable to both the borrower and the lender.  On the one hand, the borrower must responsible enough to borrow only what he needs and can afford to repay.  On the other hand, the payday loan provider must also be responsible and not overcharge its customers as well as offer reasonable terms for repayment.