Archive for January, 2009
Clemson University Study Favors Payday Loans
Posted by YadYap in P2P Payday Loans, Payday Borrower, Payday Industry News on January 23rd, 2009
Clemson Universities Department of Economics study on payday loans concludes:
- No casual relationship between access to payday loans and bankruptcy filings for all payday loan borrowers as a whole (affirms YadYap belief)
- Access to high-interest-rate consumer credit correlates with improved household financial condition
Clemson Universities Department of Economics released a payday loan study recently that YadYap believes is noteworthy. This study was more than a simple study on payday loans. The study was conducted using data collected between 1990 and 2006. The purpose of the study was to determine whether or not payday loans lead to bankruptcy.
This study is a legitimate evaluation of important data and should be used by industry regulators when considering the types of regulation, if any, that should be made within the payday loan industry.
The researchers found two positive outcomes from the study. First, that access to high-interest-rate consumer credit correlates with improved household financial condition. Second, that there was no causal relationship between access to payday loans and bankruptcy filing rates for all payday loan borrowers as a whole.
Credible studies such as this should not be set aside. There is no reason that Clemson University would have to report anything other than the facts from a 16 year study of the payday industry. On the other hand, there are those in the industry that create a bad name for everyone by using less than ethical practices.
As for YadYap, this study affirms the belief we have that there is a need for this type of short term lending. YadYap is a marketplace where the best possible solution to short term loans will be offered to fill the need.
Related articles
- National Usury Limit Could Reduce Number Of People Paying Debt Until They Die [Predatory Lending] (consumerist.com)
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Obama and Payday Loans
Posted by YadYap in P2P Payday Loans, Payday Borrower, Payday Industry News, Payday Lender on January 9th, 2009
In an Associated Press article titled “Sector Snap: Payday lenders fall on Obama proposal“ there is mention of President Elect Obama capping interest rates nationally on payday loans at 36%. We think the likelihood of Obama enforcing a 36% rate cap overnight is low and would likely be implemented in phases. There is a large demand for short terms loans and liquidity, now more than ever, and factoring in default rates, marketing and operating costs, a 36% interest rate cap business model won’t work for most of today’s lenders.
You can almost be certain that Obama will make some changes to the payday loan industry. The question is who will be ready to fill the gap if the changes are drastic. Whatever the changes may be, YadYap will maneuver to fill the gap that is created. As we continue to plan and test our system and business model we are doing it with two possible scenarios in mind. First that the payday loan industry remains essentially how it is now, and second that major changes take place that alter the payday loan industry landscape.
In spite of the economic woes that abound we are excited for 2009 and look forward to delivering a platform that will change the way people get short term financing, regardless of changes that may be made to the current laws.