Center for Responsible Lending Review

Center for Responsible Lending ReviewCenter for Responsible Lending has a motto of “Protecting Home Ownership and Family Wealth” and they’re a non-profit that has the goal of helping borrowers steer clear of predatory lenders.

It’s always nice to hear of organizations like this because there aren’t very many of them compared to the hundreds and thousands of payday lenders out there vying for your money. We wanted to explore more about what they do and see how well they’re doing to help borrowers from falling into debt designed to keep them cash strapped.

Center for Responsible Lending Review – What They Do

They help consumers by making sure that they are using financial instruments correctly, and helping to point out some of the lousier loans and loan practices out there. This would include mortgages, which a lot of borrowers got into trouble with years ago. They also handle payday loans, which the debate rages on whether this is predatory lending or not. Of course payday lenders don’t think that it is predatory lending, but many consumer advocate groups tend to think that it qualifies as predatory lending.

They also help with credit cards, auto loans, and the overdraft fees that banks charge when you spend more than what you have in your account. It seems like they cover the sort of loans and lending that often makes the news a lot in regards to creditors and lenders taking advantage of consumers and borrowers. They should be commended that they are tackling some of the hot button issues out there.

Payday Loan Write Up
They have a great piece on how payday loans can easily turn into a long-term debt, which is one of the cornerstones of why we don’t suggest getting payday loans. All too often they turn into just another bill, something that is sucking money out of your monthly budget, without providing you anything tangible or any real benefit. The vast majority of payday loan customers are repeat customers, many of which go in religiously every two weeks to give part of their paycheck to the payday lender.

After working at a payday lending company for over a year, I can honestly say it is depressing to see hard working people come in twice a month and pay the lender money that didn’t benefit them in any way. The reason they get stuck in the payday loan trap is the way it is set up. They loan you more money than you can afford to pay back on your next payday without dipping into basic money reserved for things like rent and food. The borrower simply must take out the loan again so they can pay to keep the lights on and to go grocery shopping.

So the money that was originally borrowed to help them through a financial setback turns out to be the money that they need in order to make basic living expenses. Sometimes a borrower will try to use their income tax return to pay off the payday loan and break the cycle. But even then we’d usually see those same people come back a few months later with a new financial crisis and get right back into the trap again.

Reform is Needed
Hopefully organizations like this can do something to protect citizens from practices that put them at a financial disadvantage. So many consumers don’t have the time to research why payday loans are not a good idea, and they get lured in by the premise of fast money with easy qualifying. The payday industry has lobbyists that do their best to let them have their way, and the banks also have lobbyists out there trying to shut down payday lending because it takes away from their business. It’s nice for the consumers to have a voice with places like the Center for Responsible Lending and others.

Our Recommendation
Center for Responsible Lending definitely gets our recommendation for having some very good information and being a resource that families can use to make sure that they are not getting taken advantage of during the lending process. We hope they continue to do good work and come up with ways to teach people how to borrow correctly.

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