Why do consumers use payday loans, when they could be getting lower cost loans from banks?
A. Consumers may be faced with an urgent need, such as a car repair, that doesn’t fit into their budget. They may not be able to get a short term loan or other form of credit from their bank. There is a high demand for payday loans. The Payday Loans Regulation gives consumers access to these short term loans, while limiting the amount that can be charged. The Regulation requires lenders to give borrowers complete information about the costs of a loan, so borrowers can compare costs with a bank loan, or using a credit card.
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