A new report of payday loans in Minnesota showed a few very important statistics for the people of this state. Many of them have been abused from the years 1999 to 2012 and according to state officials it reaches nearly $85 million dollars over that period. It is yet another question in many peoples’ mind about whether the payday loan industry is actually helpful.
There are millions of people who find themselves in some type of debt or another, but payday loans are some of the worst types of loans one can take. For cash strapped individuals with little or no credit, the payday loans are unfortunately the only thing that they can use.
Minnesotans and Payday Loans
It has come to the attention of many politicians and legislators that Minnesotans are on the receiving end of some serious financial drain. The Minnesotans for Fair Lending have devised study to show that there have been $82 million lost to the payday loan companies from people that barely have any money to begin with. This group includes a huge variety of different people including labor leaders, religious, and credit units, which hope to alter state law.
In 2012 alone there were 84 storefront locations in Minnesota that were able to raise over $11.4 million throughout the state. That is a lot of money in just the profit alone. Take into consideration that 2012 was one of the worst years for financial markets and many people lost their homes among other things. The people who lost so much were almost forced into bankruptcy because of these payday loan interest rates.
The Joint Religious Legislative Coalition (JRLC) has complained bitterly for the payday debt cycle (also known as a payday loan trap), which has brought down so many people who are in Minnesota. The vast majority cannot handle the debt burden and thus continue paying small chunks of interest for many months or years.
Reform in Minnesota
As a northern and more liberal state, there is a good chance that Minnesota will reform the payday loan industry. While every state has major political contribution problems, it is evident that Minnesotans are pushing legislators to reduce the interest rates allowed for payday loans or just abolish them altogether as New York state has done.
Reform may not come as quickly as some people would like, but it will nonetheless be an effective method of getting Minnesota to change the ways that have cost $82 million over the last few years. Many of the poor people in urban St. Paul and Minneapolis will he thankful for these changes.