Payday Lending

Many hailed the final passage of the financial reform bill. For the payday loan industry, however, it is the first time under federal regulation. What does this mean? Well for the political backers of the new agency have vowed to put caps on interest rates for the short-term loans. This could cause lenders to require better credit and deny loans to more potential customers.

The average payday loan customer uses the service between seven and twelve times per year. The regulations could cut as high as 50% of revenue, and possibly be the death of an industry.  Considering the industry employs over 150,000 people, the harmed could be bigger than expected. It is hard predict the actual regulations that will affect the payday lending industry but it will make the path tricky for all the mom-and-pop lending businesses.