The Consequences of Payday Loans Regulations

Dealing with the payday loan industry is a difficult feat.  On the one hand, online cash advance lenders offer funds to people who have used up their other resources and cannot receive traditional loans.  On the other, if these loans are not paid back on time, then there can be major consequences including falling into a cycle of debt where lenders can charge outrageous interest rates of up to 1000 percent if not regulated.  The state of Washington passed heavy restrictions on payday loans last year.  These rules have had some devastating consequences on all payday lenders in the state.  These new regulations limit customers to only taking out a maximum of 8 loans per year at any payday lending institution in Washington.  These loans cannot offer anymore than 700 dollars for each loan.  This has had devastating consequences for payday lenders in Washington like Kevin McCarthy whose 12 out of 22 stores have closed in 2010, one year after the regulations became enforced.  The rest of his stores will have a similar demise. There are many more companies like those of McCarthy who have been forced out of business due to these regulations.  Even though many people suspect that society will be better off without these short term, high interest rate loans, there are still consequences for the payday loan industry like the amount of jobs that have been lost due to these new regulations.  All over the country, there are similar laws and regulations that have been enforced which have also led to the falling of many payday loan lenders and the end to an alternative source of money for people who are in need of funds quickly and who have exasperated all other financial options.

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