Report: Payday Loans NOT Predatory
By Paul RizzoPayday Loan Writer
Payday Loans Not Predatory.
Such is the name of the release issued earlier today by Community Financial Services Association of America. We’re printed it below, as it outlines why a bad credit cash loan is not as dangerous as many have been led to believe.
WASHINGTON, Jan. 24 /PRNewswire/ - Payday loans are not predatory and may actually enhance the welfare of households, according to a new report issued by staff of the Federal Reserve Bank of New York concluding that payday lending “does not fit our definition of predatory.”
“This report gives clear and objective scholarly evidence that [instant cash loans] are not predatory,” Darrin Andersen, president, Community Financial Services Association of America (CFSA), said of the groundbreaking report, Defining and Detecting Predatory Lending, which was authored by Federal Reserve Bank of New York Research Officer Donald P. Morgan.
“To the contrary, the report concludes that payday lenders may actually enhance the welfare of households by increasing the supply of credit.”
“By demonstrating that payday loans are not predatory, this report refutes the key criticism leveled against [fast payday advance] lenders,” Andersen said. “The media and critics of the industry should consider the conclusions made in this important study.”
Payday advances have helped countless people pay their utility bills, make auto and household repairs and take care of other immediate family needs.
“Our industry exists solely because we offer our customers a product that is more desirable than the alternatives,” said Andersen.
“Higher prices are neither necessary nor sufficient to conclude that a certain class of credit is predatory,” Andersen continued. “As shown in this report, our customers are capable of looking at their financial options and making educated decisions as to how they can meet unexpected or unbudgeted expenses.”
Defining and Detecting Predatory Lending examined differences in household debt and delinquency across states that allow payday cash loan lending and those that do not and compared the change in those differences before and after the advent of payday lending.
Particular attention was paid to those households that are generally perceived as more vulnerable to predation (those with income uncertainty or less education).
To read the report, click here.