Borrowers in debt look for other options as other lenders support the end of payday loan rate restrictions in assembly. Consumers in Kentucky want to open all their options in the decisions they make. This includes choosing the best financial product that will fit them and their circumstances.

In the General Assembly’s recent session, self-appointed activists removed the option of payday loans for consumers by pushing a bill to remove payday lenders from the state. Luckily, there are many bipartisan free-market advocates that can overpower this consumer rights violation. However, the activists plan to come back and submit the same bill in the coming year.

Efforts given to put an annual limit to payday loan percentage rates are caused by the lack of understanding of the product. This is also pursued by organizations that are funded by payday loan competitors.

Payday loans are one-time payment, fee-based loans. The law of Kentucky particularly forbids the charging of interest by payday lenders. Its opponents describe it untruthfully to give legislators and the public the impression that payday loan borrowers are charged high interest rates, late fees, rollover charges and other forms of charges that are prohibited in Kentucky. But the truth is that payday lenders inform their customers of the real terms of their loan. Once they obtain a loan, the customers know how much they owe by the time the payment period ends.

Payday lending opponents in the state of Kentucky includes CLOUT, KCRL and AARP. All three are competitors of payday lenders. CLOUT and KCRL are mostly funded by banks and credit unions that compete with payday lenders in the short-term credit market.

A payday loan may not be the best alternative to obtain emergency money. But, it can still be the least costly option for some consumers for many families. Hence, the choice must be left for consumers to make and not for legislature or activists.

Related articles
Enhanced by Zemanta