The Payday Loan Online Problem

The Payday Loan Online Problem

There are some states that do not allow payday loan lenders from operating because the state has a cap on how high financial institutions can impose payday interest rates. But more and more payday advance lenders are finding a way to circumvent state laws by migrating to the web and offering many a payday loan online.

An online payday advance typically has a charge of $15 to $30 for every $100 loaned for two weeks. This makes the practice extremely lucrative. According to recent consumer reports, more and more online payday loan lenders no longer even bother to get licensed in the states they operate.

These reports also mention that most state and federal regulators do not track the online payday loan industry.

It is estimated that there are approximately 22,000 online payday loan lenders on the internet. These operations generate an average of $40 billion a year in loans, and about $6 billion in finance fees. Talk about making money from an industry that serves the cash-strapped!

Very few internet payday loan providers provide information about their terms and interest rates. And as the industry grows, and more and more consumers are tempted to this seemingly convenient solution, the need for more stringent policies to protect borrowers is indeed needed.

Otherwise, we will just keep on adding more and more people to the nation's 'buried in debt' list. Indeed, it is sad to note that millions of Americans do not even know how deep in debt they are already from payday loans and cash advances.