There are a lot of payday loan laws across the United States and even in similar countries like the United Kingdom. Looking at the different laws helps to see what has worked and what does not. In the example of drugs, Portugal was a famous country that decriminalized drugs altogether and found tremendous results. In the United States, looking at this drug law has made a huge difference in our own understanding of the problem.
When it comes to payday loans, a similar mentality can be taken. It is a good idea to look for the changes to the southern way of life to see whether or not it is useful to regulate the industry. However, it is important to look at the other legislation that has occurred in states nearby. When looking at the other states, one can clearly see that there is legislation that works well and regulation that has not led to much.
Arguments for Payday Regulation
There are many good arguments for payday loan regulation, but New York is not one of them. In this state, the payday loan industry has been removed completely from existence. No high fees and regulations are crippling to anyone in the industry. Still, the internet age has allowed many people to get into high rates of debt that they must pay off or face problems. Even though the New York state has prevented a lot of companies from operating in brick-and-mortar locations, online payday loan companies are sucking money out of the state, and it is impossible to make a change.
This kind of blanket regulation is not only causing New York to lose revenue from taxes, but is also having the money sucked out and people are finding other ways of getting loans to stay alive. The human being is a very intelligent entity when backed into a corner. When people need money fast in order to survive, a state law will be unable to keep up with the methods used to acquire this money. It also pushes many people to underground loan sharks that can be violent despite breaking the law.
There are other arguments in favor of regulation, such as some of the caps of interest rates on payday loans. This allows people of low socio-economic status to get the money that they need in order to survive, but it limit how much they are going to be charged. States like Alabama and Mississippi have utilized this approach well in recent years.
Overall, there is a lot of room that the payday loan industry can make in order to impose their will, but public opinion is swaying in one direction only. The only thing that public opinion needs to do in order to make the right decisions is analyze what other states have done and find the best methods for them. Combining the best results will offer the best legislation and a continued experiment in this financial industry.
