There are some organizations in Pennsylvania, such as The Ludwig Von Mises Institute, which support faxless payday loans and oppose the government regulation of it.
“We recognize why payday lending exists,” Dr. Mark Thornton, senior fellow at the organization, said.
“[No faxing payday loan] shops, pawn shops and title pawn shops have surfaced as a response to the need of low-income minority customers because these customers are discriminated against elsewhere,” Thornton said.
He explained that banks are a highly governmentally regulated industry and are often exposed to problems regarding discrimination.
“A lot of low-income people can’t even get bank accounts, so there is no way that they can apply for loans from banks,” Thornton said.
He explained that payday advances should be used in emergency situations. “People should be using them for things like medial supplies,” he explained.
Thornton also offered an explanation for payday loans’ high interest rates. “The high interest rates cover a lot of costs for the lenders. There is a lot of paperwork involved and also the everyday expenses for business,” Thornton said.
With home loans and car loans, there is collateral for a lending officer but with payday loans, the lenders don’t have any sort of material collateral.
“There is a risk for the lender and all those things attribute to the high interest rates,” he said.
He noted that all people considering taking out a cash loan online should talk to someone who has already done it.
“Then the people should go through the same lending office, that way they will know what to expect and they won’t be surprised,” Thornton said.