Are Payday Loans going to become cheaper due to interest rate caps?
Results of voting for the introduction of restrictions for the interest rate on Payday Loans in Nebraska
More and more States are limiting interest rates on Payday Loans due to the epidemiological situation in the United States.
For this reason, Nebraska voted this week to limit interest rates on Payday Loans to 36% statewide. The vote was held after Nebraska residents collected more than 120,000 signatures for voting to lower the interest rate on Payday Loans. As a result of the vote, 83% of the votes were in favor of introducing restrictive measures by Measure 428 to reduce the interest rate on Payday Loans. The reason for the vote is the interest rates on payday loans, which in this state could reach up to 400%.
Thus, after the vote, Nebraska became the 17th state in the United States, along with the District of Columbia and Washington, where restrictions on the interest rate on Payday Loans were introduced. The decision was supported by the ACLU of Nebraska, AARP, veterans ‘ groups, and religious leaders. In 2016, the same vote was held in the state of South Dakota, where residents also approved the introduction of a limit on the interest rate of 36%. Then later, restrictions on the 36% interest rate were passed in the state of Colorado. Payday Loans are fairly common in the US: according to NCSL estimates, 13 States prohibit Payday Loans, but 37 States allow them.
Payday Loans up to $1000 for Bad Credit Borrowers should survive
However, despite the success of this vote, some opponents voted against the introduction of restrictions on the interest rate for Payday Loans. Opponents insisted that after the introduction of these restrictions, businesses of organizations and lenders that provided Payday Loans to borrowers with a bad credit history would not be able to get loans from other organizations or banks.
Measure 428 also faced several legal difficulties that prevented it from appearing before voters. As a result, several lawsuits were brought to the Nebraska Supreme court. The Supreme Court ruled in favor of Measure 428.
Payday Loans and Coronovirus affect
The pandemic in the United States contributed to this vote and the establishment of restrictions on interest rates for Payday Loans. The epidemiological situation has affected the financial situation of Americans. Already in the summer of 2020, according to the Financial Health Network, one in three Americans lost their income. Moreover, 3% of the 2,000 Americans surveyed indicated that they applied for Payday Loans during the pandemic.
The popularity of Payday Loans is because they are easy to get. They are available even for borrowers with a bad credit history. To get Payday Loans, you only need to have proof of income, an active Bank account, and a valid ID.
More lenders offering Payday Loans to help Americans during the pandemic
Now a lot of organizations and creditors offer a variety of Payday Loans. Each lender has its terms, so the interest rate and fees can be very ambiguous. The only fact that unites all Payday Loans is that the loan is repaid in a month from the borrower’s next salary.
Therefore, the question arises, what to do if you need money, but most people did not receive a salary during the pandemic? Payday Loans helped with this situation. The borrower took out a loan and paid the necessary bills. The interest rate of Payday Loans is quite high, but it is much less than a fine for non-payment of services or a broken car.
That’s why online Payday Loans in the USA have become really popular recently. Modern payment systems allow you to get paid immediately after the work has been done and not after a month or a couple of weeks. Therefore, most Americans do not need to save money. And if necessary, they take Payday Loans online and then pay them off. This makes it much easier to control your finances, which is why more and more Americans are resorting to Payday Loans.
