Payday loan limits are misguided

Late last year, the so-called “Michiganders for Fair Lending” launched a ballot initiative that would do anything but make lending fairer in Michigan. They’ve named this monstrosity the “Michigan Payday Loan Interest Rate Cap Initiative,” which would likely drive Michigan lenders out of business, harming working-class Michigan residents in the process.

To understand the harm this would cause, one must understand the people who use these products. Payday loans and other short-term loans are small parts of our financial system that help consumers who have seasonal income or who don’t have access to emergency funds, such as savings accounts, loans from banks, home equity loans and 401(k) loans.