Today it is more difficult to get a loan than at any time in recent memory. Financial institutions, including major lenders, have become increasingly risk-averse, raising their loan requirements and essentially preventing thousands of borrowers from obtaining a loan.
Payday lending, while admittedly risky if abused by lenders or not handled properly by borrowers, provides a source of credit when other sources are not available, and such loans are far less costly than overdraft costs and late fees.
The market for these loans developed and thrived because the lenders provided a service that was needed by consumers. The inherent risk of these borrowers necessitates the fees charged. If the fees are found to be unreasonable, consumers will not utilize the service.
The government should not be interfering with the personal choices of consumers…
Matthew Glans joined the staff of The Heartland Institute in November 2007 as legislative specialist for insurance and finance.
