By: Gaurav Bhola, MSM, Managing Editor
Payday cash advances have been serving consumers for over twenty years. However, it is in the last fifteen years that payday loans have grown nationally and internationally. The loans are available at thousands of locations across the nation.
Additionally, consumers can access payday advances online. No fax payday loans, faxless cash advances, or online fast cash loans have become a popular alternative to payday store locations. At the retail location, customers have to wait in lines to get a fast cash loan. Meanwhile, online personal loans are easy to get, usually you can get approval within a few minutes of filling out an online application. Like many traditional financial institutions, payday lenders have leveraged the latest internet technologies for the benefit of their customers.
However, the benefits of payday loans have been in question by consumer groups and some states. These groups question the merits of the personal loans as truly providing benefits to consumers. Payday loans are short-term personal loans that have to be paid back to the lender by your next payday.
The loans shouldn’t be used perpetually to augment financial emergencies. Fast cash loans are only meant to be a stop-gap measure to meet emergency needs after all other avenues of funding have been exhausted. A recent study supports the sentiments of payday loan lenders that personal loans provide a much needed benefit to consumers. The study buttresses arguments put forth by the payday industry. The research study is completed by David W. Findlay and James W. Meehan Jr. of Colby College (CC), Bart J. Wilson of George Mason University (GMU), and Charissa P. Wellford, an independent contributing economist. The study looked into the economics of fast cash lending, and it concluded that fast cash loans in many cases aided consumers in managing their finances.
Additionally, a previous 2007 study by Donald P. Morgan, Research Officer with the Federal Reserve Bank of New York, and Cornell University graduate student Michael R. Strain, “Payday Holiday: How Households Fare after Payday Credit Bans,” also disputed the traditional notions about cash loans. The research study found that some households in states where personal loan lending was banned had more financial difficulty with debt collectors and credit lenders than states without payday lending restrictions. Hence, the study’s findings concur with the views of the payday industry.
Recently, the National Center for Policy Analysis (NCPA), referred to the Federal Reserve study and its conclusions. The main conclusion is that states where personal loans had been statutorily proscribed, customers were usually forced towards even more expensive credit alternatives. The Community Financial Services Association of America (CFSA), the payday industry’s trade organization, has declared the studies and recognition by the NCPA are a victory for payday consumers.
