Many payday loan lenders like Payday Loan Trust find themselves in a difficult situation. In November the State officials of Montana will decide if the lending industry will be regulated in the State. If it is, such payday lending companies have to stop providing their customers with payday loans and go out of the business. The payday loan can be defined as a short-term credit, which is given for a sum of money ranging from $100 to $1,500. Usually the average of the loan is $300. It is repaid the next day after the borrower receives his paycheck. These types of loans are popular among Americans with middle income who turned out to be in a bad financial situation for some period of time and need urgent money before their payday, but don’t have an opportunity to borrow some other short-term loans. But the citizens of Montana can loose the possibility to receive payday loans, as a new initiative I-164 is to be enacted this November. This act can ban the operations of payday lenders like Pay1Day and make hundreds of people engaged in this industry loose their jobs.
According to the initiative the annual percentage rate on payday loans is to be established at the level of 36%. It means that lending companies can receive only $1.38 fees for a credit of $100, provided for the period of 2 weeks. The lenders will be under the risk because the most of their customers have bad credit history. The 36% rate means that payday lenders will be not even able to cover their expenses after the licensing procedures, defaults of the clients and operational spending.
The adoption of the similar legislative acts has made many payday loan lenders be informed in the latest news and regulations in the industry not just in the State of Montana but in other American States. Even direct internet lending companies such as Payday Loan Trust or Pay1Day that offer loans to customers directly through online services can be imposed with fines, if they continue their lending procedures in the States, where the loans are banned by legislation or limits on percentage rates are set. Finding themselves on the border of these regulations is very dangerous for payday lending companies and their further activities in this industry.
Most Americans are suffering from governmental regulations and restrictions in lending industry. The officials have not only cut the number of working places for lenders, but also made it impossible for borrowers to choose from a wide range of loans and thus worsened their financial state. The measures could not be so harsh, if the government just limited certain procedures in lending industry, such as extension of the credit. Instead of this, the whole lending business is under control. As a result borrowers don’t have any alternatives to receive a loan, so that they need to apply to unlicensed and unsecure online lenders that constantly deceive their clients.
In contrast to reliable and reputable lending companies, the fake lending websites are the origin of a great amount of complaints toward payday lenders. In reality these lenders are criminals who offer borrowers to complete the application forms online. But after completing the forms customers have no opportunities to connect with a lender and receive a loan. And in some period of time they must give back the money they have never got.
Hopefully for the lenders and borrowers the initiative I-164 will be rejected in Montana. This will help lenders not to loose their jobs and give customers possibility to choose. In fact, every operation in payday lending industry is already controlled and monitored as in no other industry.