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Is there no way government could regulate interest on payday loans?
#1
In as much as I agree with the fact that payday loans are one of the most sought after loans we have around. I mean all you've got to do is to follow a link and input the necessary requirements such as your social security identification number and some other crucial details and within minutes you will have the requested loan amount in your bank account. Doesn't that sound easy? I'm sure everyone will jump at the prospect. 

However, my worry is on the huge interest rate that comes with getting such loans and it gets worse if you're unable to repay the loan within the stipulated time. So, my question is what is government really doing about regulating the interest the people pay on payday loans?
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#2
Funny enough, there are a number of countries where the government has regulations for payday loan companies.
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#3
I am not sure how easy it would be to get payday loans that operate online to adhere to the law. Regulation of online businesses is a bit more difficult to enforce than laws for businesses that are located in state. The internet is some ways is still kind of a Wild West.
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#4
I don't think the government can set a specific interest rate. That would be something North Korean government would do. USA is not under a communist regime.

The existing US law requires payday lenders to disclose interest rates in APY (annual percentage yield) format just like credit card companies and banks. What people miss is that payday loans are meant to be short-term, ideally repaid within two weeks or less.
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#5
Still might they find some ways to regulate but finding hard time for them to control. Lenders choose online lending for them to hide from the state laws of their illegal acts. Online is the biggest place and avenue to deal with. It facilitates different kind of products and services to end users. But, there is a dirty little secrets behind online pay day lenders who violates states law is that they cannot win in state court, lenders cannot take cases in the court once they having trouble with their borrowers since they operate illegally.
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#6
There is a law that places a cap on loan interest rate and it is known as Usury Law but its implementation can vary between states and countries. Some countries have abolished the Usury Law to allow creditors and borrowers to stipulate among themselves the rate of interest for a loan. Some states have Usury law while others don't. Payday lenders can circumvent the law by operating online and transferring their base of operations to a place where this law is not being implemented.

Payday lenders are typically upfront with their fees and the borrower can choose to take the loan based on the offered terms and rate or walk away. The government can impose a cap on interest on such loans but the lenders may take their business elsewhere. This can mean loss of financing facilities for people who rely on this type of loan to sustain their business or make both ends meet.
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#7
(01-05-2018, 01:00 PM)Camilla Wrote: There is a law that places a cap on loan interest rate and it is known as Usury Law but its implementation can vary between states and countries. Some countries have abolished the Usury Law to allow creditors and borrowers to stipulate among themselves the rate of interest for a loan. Some states have Usury law while others don't. Payday lenders can circumvent the law by operating online and transferring their base of operations to a place where this law is not being implemented.

Payday lenders are typically upfront with their fees and the borrower can choose to take the loan based on the offered terms and rate or walk away. The government can impose a cap on interest on such loans but the lenders may take their business elsewhere. This can mean loss of financing facilities for people who rely on this type of loan to sustain their business or make both ends meet.

I still don't understand the reason for the abolishment of usury laws in some countries for that would have offered a kind of protection to the borrowers especially when getting payday loans are involved. The thing is that some governments are not doing quite enough to curb the menace of payday loan givers and that's pathetic considering the fact that they are meant to protect the citizens. 
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#8
Of course they can but if it's online then it will be hard for them to implement it. Because if it's online then the transactions takes place all over and not restricted to just one city or states and every law with each places will also vary that's for sure.

What the government can do is to create a program or a government organization that caters people wanted to avail a payday loan. That way they have the full control of it and they can also help improve the life of their people at the same time.
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#9
I agree. I think it would we hard to implement those laws for those who process online. I hope the government would give a tight grip about this issue.
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#10
(01-06-2018, 01:12 PM)Heart Wrote: Of course they can but if it's online then it will be hard for them to implement it. Because if it's online then the transactions takes place all over and not restricted to just one city or states and every law with each places will also vary that's for sure.

What the government can do is to create a program or a government organization that caters people wanted to avail a payday loan. That way they have the full control of it and they can also help improve the life of their people at the same time.

Well, I think you've got a point in the sense that it is going to be hard for government to check out how the online payday loans process works. However, I think there is need to setup a law that states the interest cap that each payday loan scheme can charge their borrowers to ensure no one will be cheated. 

On the thought of government having a program that can replace payday loans, it's going to be difficult considering the fact that such programs are always exploited by the officials. 
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