loan companies that grant short term loans are thriving and have established that Mississippi and payday loans go hand in hand.
With over 1000 loan storefronts across Mississippi, it takes little effort to find these places, and that is actually by design!
Along with location comes the ease to qualify for one of these loans and wham, you are on the top five on the recent list by The Consumer Financial Protection Bureau (CFPB)
Today we will look at why Mississippi is a hot bed for these high interest short term loans and what it means for the people living in this state!~
Cause and affect
There are several reasons why this state comes in so high on the list of top states that write these loans.
In general, the CFPB was the regulatory entity created by the Obama administration to combat these types of loans and regulate them and for the most part they were doing a good job.
They had new laws taking affect that would regulate the ability for the borrowers to afford to pay back these loans and cap the amount of interest the loan companies could charge.
They also had a cooling down time period between taking out these loans but all of that went away when the Trump administration eliminated all of the new regulations
They claimed it tied the loan companies hands and was causing undue loss of profits and they also claimed this type of regulation should be up to individual states to set their own policies and regulations.
The results of this action now have what was once the watchdog of the predatory lending industry becoming powerless to do any regulating.
Another big factor in Mississippi is the number of people living from paycheck to paycheck and do not qualify for regular credit options.
When an emergency arises they have no place else to turn to get short term cash so off to the payday loan store they go, and to many this is a much needed option!
What is not needed is the lack of regulation that would keep this type of loan safe for the consumer to use.
The companies claim that they can not be profitable without charging huge interest rates but that is really only a small part of the real story.
These companies have a very shrewd business plan that targets the poor and takes advantage of them.
When you have people over a barrel and they need money they will take what they can get regardless of the risk involved and that puts them in a very bad place.
Low income people who use these services are more likely than not to run into trouble paying the loan back on the due date in full and end up extending their loan.
This is where the predatory label kicks in.
Because the loan companies know that the average payday loan user will renew his or her loans on average 8 times before they pay it off in full they target these people, thus the number of storefronts in low-income areas.
This is a well thought out business plan to create huge profits at the expense of others hardships and that is how these loans get the nickname of predatory loans and in
What can people in Mississippi do to combat this?
Mississippi like many other states really has to take a look at their state laws and come up with their own regulatory laws.
Many states like New York for example are completely eliminating these loans by making them illegal.
The problems that come along with each state doing it’s own regulating is this puts the politicians up against huge money in the payday loan industry that is notorious for lobbying relentlessly!
We feel that educating people on how to use these loans and keeping them out of the debt cycle is the best way for us to approach this.
Our article: “What Is A Payday Loan Trap” covers the best way to use these loans and stay out of trouble while doing so.
While these loans do serve a purpose that is greatly needed for the low-income people of Mississippi and many other states there need to be guidelines to follow when using them and the best defense is always knowledge!
Since the regulatory commission seems to have other ideas about the safely of predatory lending, we are more than happy to step up and help people understand how to safely use these services and how to not get caught up in the debt cycle that usually accompanies them.