[ad_1]
There’s an industry out there that makes a living by exploiting desperate people, unsophisticated people, or both, giving them the appearance of cheap loans and forcing them to keep taking out new loans. It traps you in a cycle of perpetual debt. Pay an additional fee to repay the old one.
There are many people in South Carolina who are unable to pay for an unexpected car repair, roof repair, or medical bill and believe their only option is payday lending, title lending, or so-called installment lending. There are more than our fair share of such people. — This assumption is often tragically wrong.
It is no surprise, then, that there are a significant number of people struggling with the burden of loans that they cannot afford to repay in the first place and are sure to become unable to do so with each new fee added. The South Carolina Daily Gazette, an online news organization affiliated with the nonprofit States Newsroom, estimates that South Carolinians will owe $2.8 billion in high-interest loans in 2022, including $650 million in two-month debt. reported that the repayment deadline has passed. An estimated 400,000 South Carolinians are struggling to repay these loans.
It’s difficult to know exactly how many states restrict certain types of predatory loans, but South Carolina does a better job of easing these lenders than most other states with strict regulations. It is clear that Georgia and North Carolina, for example, have banned payday loans.
Although South Carolina placed certain restrictions on payday lenders in 2009, these lenders, like the industry as a whole, continue to thrive, thanks not only to high interest rates but also to predatory lending practices.
For years, religious leaders and other advocates for the poor have worked with credit unions to try to persuade Congress to cap annual interest rates on nonconventional loans at 36 percent. This is the maximum amount that the federal government can lend to member states. military service. And for years, lenders have fought off such efforts.
This year, Sen. Tom Davis also joined the effort, introducing a new approach. Instead of capping interest rates (which many believe is not the government’s job), his S.910 would outlaw predatory practices. The worst part is sending so-called “courtesy” or live checks to consumers, expecting them to cash them, and in doing so taking out loans at triple-digit interest rates.
If the check-by-mail scheme looks familiar, it’s because shady financial companies dupe people with traumatic brain injuries and other particularly vulnerable people into millions of dollars that will be paid out in the future in personal injury lawsuits. This is because they have done this in order to have their products traded for thousands of dollars. Congress banned the practice last year.
Sen. Davis’ bill would also allow certain types of loans to be made without a prior analysis of the borrower’s ability to repay; This makes it illegal to take out a loan by flipping the loan. In addition, if the number of times exceeds the limit.
The bill includes provisions that free-market advocates rightly object to, particularly those that would outlaw marketing to low-income areas. This does not apply to most clauses.
Although many lawmakers oppose laws aimed at protecting people from themselves on principle, at least when it comes to financial matters, we already have access to regular paychecks through traditional financial institutions. We are enacting laws to protect those who receive it. This would extend protection to financial institutions that target people who do not think they can obtain loans from traditional financial institutions.
And by providing consumer protections to some of our most vulnerable neighborhoods, Congress will reduce the likelihood that they will become trapped in an endless cycle of debt that further increases poverty and the need for public assistance. You could do that.
For more opinion content from The Post and Courier, click here.
[ad_2]
Source link
