What Consumer Advocates Don’t Want You To Know
The Center For Responsible Lending and other “consumer advocates” base many of their arguments against short-term lending on the “cycle of debt” that they say customers are lured into. Apparently, cash advance centers seek out individuals who are in a bind in order to loan them a couple hundred dollars that they can’t ever pay back. Well, there are several problems with this assumption. If consumer advocates were really so concerned about the welfare of those who are having temporary financial difficulties, then why are they never on a mission to educate people on the truths of short-term lending? It’s simply because they have a vested interest in the elimination of non-traditional lending and finance- including payday loans, title loans, rent-to-own centers and pawn shops. So, instead of giving consumers useful information on supplemental income choices, the CRL finds the worst case scenarios of people who have clearly misused these products and had prior financial difficulties beyond what any short-term loan could assist with in order to prove their theories.
These lenders are regulated by the state, so if there are any instances in which a customer is expected to pay the entire balance by their next payday, the reason is most likely that the particular state doesn’t allow for rollovers or extensions. The industry’s trade association, CFSA advocates practices and procedures that are in line with local laws. Another problem with the CRL’s cycle of debt theory is that all CFSA members have a contractual obligation to allow every customer the opportunity to pay their loan, interest free, in installments if they express difficultly paying. This is not information that the CRL willing shares with their target audience and lumping every short-term lender into one category is preposterous but it gives the CRL the opportunity to target and generalize them all. It becomes our duty to be knowledgeable on the CRL and all of its skeletons and affiliations.
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