Once again, zoning issues are in the news and this time it pertains to Iowan low cost payday loans. The Zoning commission is looking into regulating where payday lending companies can be located. Their studies have shown negative effects on communities near their locations.
There is always the concern of what is the best way to regulate payday loans locations.
Direct online payday loans are not the concern with this study. The Iowan zoning staff are recommending that the payday loan stores be limited to commercial zones, have at least 1,000 feet in between similar operations and not near locations which can be negatively affected by their location. Basically, the idea all boils down to limiting the amount of stores which can open and keep them away from low income areas.
Iowans have been known to take out an average of twelve payday loans a year. Just the fees alone could run up to a few hundred dollars or more depending on the size of the loan. People with low income could be using that money somewhere else and the state government recognizes this as a problem. Where would be the best location for these operations is still a not yet answered question.
The inquiry looked into the reason why these people are taking out so many loans. The state zoning commission believes that the convenience of the locations are promoting irresponsible lending practices, like borrowing money for extravagant spending which would not be spent otherwise. The high interest rate for loans which are not paid off in the short term scheduled add extra financial demands that low income individuals cannot afford.
The commission did touch upon responsible borrowing when the issue of people needing to live within their means was addressed. Was again though, the idea that the payday loan lenders are making the loans too easy was highlighted.
Online Payday Loans follow no zoning laws.
The easy access to online low cost payday loans do not target in on any city demographic, but are just as easily accessible if not more so than store locations. The qualifications are different and it may be keeping some people away from applying. Instead of having a check to sign over to the company, the online operations will ask for a bank statement in order to see recent activity. It does hold some accountability to the customers and any good responsible online payday loan lender will deny applications based on their inability to meet qualification standards.
As much information presented to potential customers about the potential dangers of these loans, there needs to be additional education for how to take care of personal finances responsibly. There is only so much blame that can be for just one side. Yes, there are payday loan companies who will take advantage of customers and they should be stopped. Yes, there are companies which try hard to lend to those who fit into a more responsible category, but ideally it falls upon the borrower to return the loan on time in order for it to stay cost effective. The loans do cost more though if not paid back on time. Continued efforts by both parties will hopefully create a better financial relationship between both.