We got several replies to our question about whether payday loans should be federally regulated. This is from reader Stanley Hirtle:
“It is useful to get an influx of cash for unexpected expenses to your home or car, but if you don’t have the money now you are unlikely to have it, plus a lot of additional fees and interest, at you next payday, or even two weeks or a month later. As a result people don’t just take out one payday loan, but the majority take out several, paying off the last loan with one or two more, and fall hopelessly into an inescapable debt trap. Studies found that … the most common number of loans per borrower was 13 loans per year.
“This is the classic definition of usury, but is highly profitable and generates contributions that provide friendly rulings from regulators, legislators and courts. The debt trap harms everyone, and the costs and terms loans need to be regulated.”
Thoughts? Email email@example.com.