Back when Georgia banned pay day lending, it became the only state to do so. Every other state has some variation of the financial institutions that allow people to take short term loans based on their paychecks — advances on their paychecks, if you will.
Consequently, Georgians who have that opportunity are now crossing state lines — Columbus, Augusta, Rome, Atlanta, Savannah, and other areas near state lines are seeing residents cross state lines for quickie pay day loans. Business is booming right inside the Florida, Alabama, and South Carolina lines. And in Macon and other areas, pawn shops are doing well.
It’s not a surprise. The state cut off a business that had demand and forced residents to go either out of state or to even riskier enterprises (no data was available on loan sharks, other data is anecdotal based on my googling and making lots of phone calls). The free market is an amazing thing. New and novel ways of accomplishing what had once been allowed started growing.
Now the state is thinking of allowing payday lenders back, but with much tighter regulations than previously existed — tighter than most other states. Consumer advocates, the industrial loan groups, etc. are crying about how this will screw people. I find it interesting that several editorial boards in the state, from the decidedly liberal Macon Telegraph to the papers in Rome and Albany, disagree with the consumer advocates and have instead come out in favor of passage of the payday lender bill. The AJC, on the other hand, has come out against the bill, which is just another sign that the bill is worth passing.
I think there is no way to stop people from getting payday loans. They will go where they can to get the money they think they need. The irony is that the consumer groups who favored ending the old law wound up with the law of unintended consequences biting consumers on the ass. It’s time to correct the problem and introduce a more regulated scheme of payday lending, instead of an outright ban.
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