The existence, perpetuity, and proliferation of payday loans: Impact on vulnerable populations and the regulatory policy process in Texas
If you have ever driven by a street, typically not in a very wealthy neighborhood, where a store front displayed signs with words like "Instant cash!," "No Credit Check," "First loan free," then you likely witnessed the marketing of a product called a payday loan. Payday loans are a form of a short-term loan product that is usually grouped with other loan products within the subprime lending industry, alternative financial resources, or fringe economy markets. This loan product has been the focus of a number of controversial debates among consumer protection groups, financial institutions, state regulatory entities, and legislators, regarding the payday lending industry's practices. ^ Its documented interest rates in excess of 500% annual percentage rates (APR) as well as the known fact that the majority of payday loan borrowers are typically minorities and low-income individuals, has led to a synonymous use of payday lending with predatory lending. Predatory lending practices are illegal within the financial services industry, yet the legality of payday lending within the majority of the states where regulation exists for the industry remains. One may pause and ask what the real story may be, especially when it is learned that payday lenders often operate outside their respective state regulatory parameters.^ If the consumer is to be protected through the adequate provision of necessary financial products and services from the financial service industry, then the same should be expected of the payday lending industry as a subset of the financial services industry. The purpose of this descriptive and exploratory study is to mainly document the industry's practice, the impact on consumer populations with regard to consumer behavior, the industry's operations in relation to the existence and absence of regulation, and the state of Texas's trajectory towards reforming or developing regulatory policies for the industry as a case study.^
Political Science, General|Sociology, Public and Social Welfare
Gonzalez, Azuri Lizeth, "The existence, perpetuity, and proliferation of payday loans: Impact on vulnerable populations and the regulatory policy process in Texas" (2011). ETD Collection for University of Texas, El Paso. AAI1494350.