Pennsylvania consumers may be in for a shocker if a new finance-related bill makes it through legislation. Late last week, Rep. Roy Cass, introduced bill HB5720 to the Pennsylvania state House of Representatives that could affect the state’s current ruling on payday loans. The bill, backed by over 50 House co-sponsors from both government parties, stands to allow out-of-state bad credit payday lenders back in the state of Pennsylvania. The bill could pass as early as next month. Much like any other piece of legislation concerning payday lending, the HB5720 bill is met with opposition from various nonprofit community groups out to protect the state’s consumers.

The Opposition

Legislative counsel for the Center of Responsible Lending, Lana J. Pate, plans to visit PA in the coming week to educate community members on the dangers of payday lending – maintaining the opinion that this type of financing is too risky and predatory to low-income borrowers. Representative Pate argues that his proposed bill will incorporate the strongest lending protection to consumers. The protections include regulating the size of a loan, placing caps on the size of loans consumers can borrow as well as the fees and interest associated with each loan, prohibiting roll-over loans, and enforcing mandatory and transparent disclosure to all consumers on the part of all lenders.

Are Payday Lenders to Blame for Consumer Debt?

Payday loans may be synonymous with fees and high interest, but are they responsible for trapping consumers in a debt cycle? It’s true that some consumers mismanage their payday loans and find themselves dealing with debt. But the true culprit may not be the fault of payday lenders. Many borrowers are struggling with debt before they ever thought of taking out a payday loan, while other consumers struggle with bad credit, and cannot qualify for other financing. Payday loans are often the only option for millions of consumers.

Debt stems from poor financial choices and a lack of financial education. Current consumer statistics show that many consumers have very little understanding of how to manage their finances. Lenders agree, if you’re going to take out a payday loan there are things borrowers need to plan before signing on the dotted line.

The Pre-Payday Loan Checklist

If you are considering borrowing a payday loan, make sure you evaluate the following items before filling out a payday loan application.

– How much money do you really need? If you only need $300 to help cover an expensive car repair, only borrow the $300 and nothing more.
– Remember your deadline. No ifs, ands, or buts, eventually you need to repay that loan. Never take out another payday loan to cover an existing one.
– Know your budget. Understand that you will have to repay the loan on a certain date. Make sure you can pay back the loan, and still have enough left over to get you through your next paycheck.

Payday Loans in Pennsylvania, and Other States

Should the HB5720 bill pass in Pennsylvania, it’s up to consumers to educate themselves on proper borrowing procedure. Of course, lenders are responsible for providing full disclosure regarding all terms associated with lending, but it’s the consumers’ responsibility to review and understand the terms.…