Payday loans are one of the easiest ways to get loans for an average income earner requiring cash for an emergency in America. It fulfills the need for immediate cash and makes sure the day-to-day normal activities are not hampered.

Be it a sudden car repair or filling gas so that you reach office on time, or cash for a medical emergency – payday loans comes in handy.

In other words payday loans are a boon for middle class Americans who are already suffering from the greatest depression of their lives.

Unfortunately and to bring more pain to loan borrowers two congressional bills have been put forward that will, unequivocally, cause all short-term payday lenders to close their doors. The bill is known as “S 500” or “House Bill 500”.

The name of the bills:

1. ’Protecting Consumers from Unreasonable Credit Rates Act of 2009′ – authored by Senator Richard Durban D- IL.
2. “Payday Loan Reform Act” – authored by Luis Gutierrez D-IL.
 
The S 500 bill if introduced will ban most, if not all, short-term credit lending, including everything from payday lending, car title loans and bank overdraft loans. This will not only cut off access to convenient and easy short term cash, but also put more than 50,000 people out of work across USA.

Here is why:

These bills will bring a 36% rate cap on any payday loan. Under a 36% APR cap, for example, the fee on a $100 payday loan would be a mere $1.38, less than $0.10 per day. No lender – not a bank, not a non-profit, not a credit union – can make a profit with such a cap and eventually be out of business leaving millions of Americans nowhere to go for short term cash requirements.

Those who are opposed to these bills can contact their congressional representatives and/or Senators and tell them that this will do no good to the borrower as well as the lenders. Borrows will have nowhere to go for short/small loans and lenders will lose business and their families affected.

You can click here and select the link reading “Urge Your U.S. Senators to Oppose S 500”.

A payday lender asks for $15 to $25 on an average on a $100 loan to be returned in the next payday. Compare this to a bounced check where the penalty is $35 and it also affects the credit rating.

Payday loans may be costly on paper, but in reality they are not! It’s also not that the people who borrow payday loans are not aware of the high APR these loans carry. They borrow because they need money more than anything else during emergency.