Over the last few years, our economy has faced a significant decline. Although things are picking up, some people are finding it difficult, almost impossible, to get back on their feet with the same financial stability that they once had, but lost.
Recent polls show that if faced with a significant unexpected financial expense in the next month, nearly half of Americans say they would not have the money available to pay for it. In fact, living paycheck to paycheck is more prevalent than ever. So what available credit options do these people have?
Well, since many people have an undesirable credit history, getting a loan from the bank is out of the question. For many people, small loans are their best alternative.
The Debate Over Small Loans
Although illegal in some states, small loans offer immediate access, in states where they remain legal, to loan services for borrowers who cannot qualify for other loan options. The small loans industry continues to expand due to high market demand for the service and, in addition to loan stores, are available online through online lending services like Little Payday.
Despite the high demand in the small loans industry, local legislatures often push to ban or regulate the lending abilities of small loans lenders.
Like any topic of debate, there are two sides to every story. The same holds true for the debate over the regulation of small loans in local legislation. Those who oppose small loan lending feel the government should ban, or at least regulate, small loan lending because of their predatory lending practices.
Predatory lending is described as lenders imposing impossible loan terms, fees and high interest rates, on borrowers that trap them in a long-term debt cycle and make it impossible for borrowers to repay their loan.
Conversely, those who support small loans lending services place higher value on the advantages that small loans offer consumers. These advantages are the easy access to credit, fast cash, and the ability to cover unexpected financial expenses while between paychecks.
The biggest advantage small loans provide to borrowers is offering an accessible lending option when other options are limited or non-existent.
Ultimately, the decision as to whether or not small loans help borrowers or hurt borrowers is up to the individual circumstances of each borrower.