The cash payday lenders are becoming more unpopular among government official. It is believe some of the borrowers are having sour relationship with the lenders who had lend money to them. Some of the borrower claimed that the low sum money that they took have become too huge for them to pay off. Some have been asked to pay up to $1500 for $300 loan. There are borrowers who have been threaten that they will be thrown in jail if fail to pay off their loans. Theses cases have been attracting wide attention from consumer association and political figures. There are even official who claimed the lenders as loan sharks. The matter need to be resolved quickly before more serious incidents happen.
One of the example, when a man that took a $300 loan have been paying up to $500 and later found out the principal sum is still intact as if he never paid a single cent. The lender claims that the man only pays $50 each month as a punitive fee and not as a repayment for the full loan. The lenders have been debiting from the man checking account for 10 months and to the lenders the principal sum has never been paid. The lender will only end the punitive fee until the man issued a check for $300 plus interest as repayment for the loans. The case was brought forward to the attention of the police after the borrower was threatened by the lender.
This is one of many scenarios that are happening all over the country. The same situations have caused some states government to declare cash payday lenders as illegal business. There are now 13 states that have made law to declare it is illegal to run such business in their states. Some of the public see the action to outlaw such loans transaction will only be a bad event for many low income and people with bad credit reports to find financial aids when the conventional banks would not lend to them. The lenders have also protested the government action as to harsh because majority of the payday loan companies have no problem with their clients. They claim those lenders that are having problem with their borrowers are not bona fide lenders, but scam companies or even loan sharks that use the payday concept as their fronts.
Many cash payday lenders have justified the need to have high interest rate for the loans, They claimed the high interest rates are needed because nobody in the right mind would give out unsecure loan to somebody they don’t know and the part of the interest rate is also used to pay for the operation of the business. To the lenders what they are doing is more than a business compare to banks. The banks will never give out such loans because it see it as not profitable and banks will never give out loan to borrowers with bad credit rating even if the borrowers claim the money is to buy food or pay the doctor. The lenders claimed their fast cash advances have help many poor people to survive another week before the paycheck is out. So will the government or the commercial banks create a more humane cash advances for the poor people and bad credit rating borrowers to rely on when they need to have emergency financial assistant which have been provided by the cash payday lenders.