Payday loan petition not what public would think – Springfield News
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There is little doubt that the financial crisis continues in Missouri. Last month, state legislators announced that the largest issue facing the Missouri General Assembly would be cutting spending to balance a budget with a shortfall of $400 million to $700 million. This leads me to worry about what will happen when we can’t meet our financial obligations, but we can’t make any more cuts.
The same question plagues many Missourians—what will happen to their families if they experience unplanned circumstances or expenses? Will they face crippling financial distress with no place left in their budgets to cut? Right now, many can still turn to traditional installment loans as their safety net (unlike the Missouri General Assembly). However, that may not be the case if the ballot proposal deceptively called the “Payday Loan Initiative” is passed.
Recently, there have been heated discussions about this ballot initiative to cap interest rates. While the initiative is being widely reported as an effort to protect Missourians from payday loans, if passed, it would severely limit all small-dollar loans, including traditional installment loans.
Our neighbors, families, friends and community members often rely on traditional installment loans as an important financial tool in an increasingly strained economy. Such restrictions would force many traditional lenders to shut their doors and would take away this essential credit option for Missourians. This could have a drastic and potentially devastating impact, denying individuals and families important sources of credit when they need them the most.
Traditional installment lenders should not be confused with payday lenders. Traditional lenders structure loans to build in consumer protections and give borrowers a clear path out of debt. These lenders verify an applicant’s income and ability to repay the loan, and report all transactions to credit bureaus. Traditional installment loans are structurally the safest loans on the market, as they are paid off in equal installments of principal and interest, with no balloon payments. They also allow the borrower to build credit history while protecting their personal financial security.
Article source: http://www.news-leader.com/article/20120114/OPINIONS02/301140014/1004/life/?odyssey=nav%7Chead
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