There is a constant fight between lawmakers in government and those payday lenders with the money to influence lawmaking. In the state of Mississippi, there is a welcome discussion of an affordable alternative to payday loans rather than banning them or allowing them outright.
The problem with banning payday loans is that it often leaves people with fewer options and no way of getting money easily. Obviously, the advantages are keeping people from getting into the payday loan trap, which can be disastrous for their life. Finding an affordable alternative compared to payday loans could help prevent many disasters in many households.
Affordable Consumer Credit Products
Education is one of the most important factors in payday lending. A financial institution called Southern Bancorp has started helping to offer a few unsecured lines of credit for testing purposes. The biggest part of the push is educating low and moderate-income individuals about the risks of managing debt poorly and protecting finances.
Many people think that this education component is exactly what the industry needs. Considering it is from a financial institution based in the community, there is also a level of trust that would not come from a payday loan company. If you are interested in getting an education in the Mississippi area, it is possible to contact them to see whether you can get some assistance.
The small lines of consumer credit will be opened similarly to payday loans. Typically, lenders can only make money by charging incredibly high rates for such low loans. Sometimes this can be excessive, and most times, the borrower does not pay. This causes many problems and requires them to charge higher rates.
Will Alternatives Work?
The question of whether alternatives will work or not is a difficult one to answer. Most people suspect it will work in a limited sense, but it will require time to educate people. Starting with a single state is the first step, but getting across the country and impacting people’s lives will be much harder. People in Mississippi might be able to make the right decisions for their own money in the near future, but it will not be easy for everyone to do so.
Although it is a step in the right direction, it is hard to say that it is worth more than the payday loans currently helping people immediately across the country. Getting people to stop using payday lending will require great consumer credit appeals from these financial institutions.
