Although many states are enacting rate caps for fast loan companies, there are legal loopholes which allow them to continue to take advantage of consumers and charge more interest. For many the process of getting a fast loan quickly deteriorates into a series of ending fast loans and skyrocketing interest rates as high as 400%. If a consumer does not pay off a fast loan within the required time, they are usually forced to get a second loan to pay the first one off and a vicious cycle begins that is hard to break.”Although people may not be losing their homes, they are losing their paychecks,” said Greg Brown, director of public policy for Metropolitan Family Services in Chicago.”We are trying to protect the rights of people who have no power and no clout, and we are up against a very well-financed and politically juiced opposition,” said Lynda DeLaforgue, co-director of CitizenAction/Illinois, a major force in the drive to reform payday loans in the state. “My fear is that with all of the other states cracking down, it only puts us in a more difficult position because what happens here is going to be very important for [the payday loan industry’s] bottom line,” DeLaforgue added.
Related reading: Fast Loans
Comment on this article