As of July 1st Payday Loans stores are illegal in Arizona, should Texas follow their lead? After years of lobbying against payday loans which are predatory by their very nature, Arizona legislators have successfully banned the practice in their state. But unfortunately, the citizens of Texas are still vulnerable to the payday lending industry and need legislators to stand up now to protect the financially vulnerable who are the primary targets of payday loan merchants. Below are a few reasons why Texas may want to consider placing an outright ban on payday loans:
- Payday loans are predatory in nature. The payday lending industry preys on the weak, financially vulnerable and depends on an individual’s desperation to “seal the deal.” Most people only turn to payday loans as a last resort because even the most financial unsophisticated individual understands on some level that a payday loan is not a good deal.
- Payday loans weaken the borrower’s financial health. While the payday lending industry claims that they are here for the little man who can’t get a loan from big banks, the truth is that when a debtor takes out a payday loan, they put themselves deeper into a financial hole that is often impossible to get out of – and that’s not an accident, that is by design.
- Payday loans have incredibly unfair and abusive interest rates that can go up to 400 percent. Many debtors who take out payday loans find themselves unable to repay the loan after the prescribed amount of time and end up taking out another payday loan just to cover the first one. This creates a vicious cycle that drives the payday lending industry’s profits. Any business that is designed around exploiting the weakness of the financially vulnerable should not exist.