Eliminating Payday Lending Industry Doesn’t Fight Poverty

In the state of Texas, it is getting harder and harder to get a payday advance cash loan. This is due to the efforts of the Dallas Coalition who has made that a goal of their organization. They state they want to do this in order to protect low income consumers out there. They feel payday lenders are benefiting from the hardship that this sector of the population is faced with. According to Larry James who is the CEO of this non profit organization, the coalition wants to help those in poverty, but they don’t see cash advance loans as the way to make it happen.

The legislation in Texas has deemed that cash advance lenders can’t be considered credit service organization. However, there are challenges in place regarding various zoning ordinances that would impact payday loan lender physical locations. The Anti Poverty Coalition of Greater Dallas feels that cash advance stores help to fuel poverty instead of end that cycle. They feel that these lenders are exploiting the customers and also encouraging bad spending habits to continue.

The lenders in Texas continue to debate those claims though. They don’t feel that they exploit customers at all. Instead, they feel that they are offering an opportunity to those consumers that can’t get a typical personal loan through their bank. They state they do fully disclose all of the fees and rates of interest for the consumer to be well informed. They also point out that the customer can pay off the loan faster than agreed without penalty in an effort to further reduce interest.

Many payday loan lenders offer educational information to help ensure that customers aren’t relying on their services to meet basic living expenses. They point out that these funds should only be considered in an emergency type situation. Therefore, they don’t see how they could be contributing to bad spending habits. They are also quick to point out the economy has made more people dependent on payday cash advances, and not their spending habits.

Right now there are legislative efforts in place to cap the APR for a payday advance in Texas to no more than 36%. They are also continuing with zone ordinances that will prevent these businesses from being in given locations. The payday loan industry wants to let the government know that they employ many individuals at these centers. Should they have to close down, that only further increases the problems in Texas relating to high unemployment numbers.