Price Caps for Loans: Good or Bad Thing?


Are price cap restrictions good or bad for high cost loans? Well, let’s see. Also, let’s find out where you can get low cost business loans so you can navigate the current challenges caused by COVID-19.

Price Caps for Loans

Did you know that the U.S. already has 18 states using a price cap of loans (36%)? Microlenders need about 140% annual percentage rate (APR) for profit. Recently, the government representatives have been discussing the need to use the price cap in the other states as well.

Well, what is meant by this price cap regulation? This type of economic regulation puts a restriction on the prices. Some believe that since the U.S. short-term lending space is huge, such restrictions could make thousands of companies lose their business and thousands of employees become jobless.

Just follow the lines below to find more viewpoints on whether a price cap on loans is a good or bad thing.

Price Restrictions & Business Loans

Sen. Jeff Merkley, together with several co-sponsors, has recently discussed the issue of extending an interest-rate cap. Currently, it’s applicable to active-duty service members, but they want to extend it to everyone. More specifically, this would mean a federal law that won’t allow lenders to provide consumer credit to active-duty service members at an APR of over 36%.

According to some experts in the field, society overall could benefit from a price cap, but it should be applied gradually. There are members of Congress who point to the historic evidence on rate caps and highlight the harmful effects caused by price controls.

Those who aren’t for price caps think people desperately in need of credit will face greater challenges when trying to get access to capital. This will eventually result in a higher cost of credit for lots of other borrowers. As for loan providers, they’d prefer offering fewer small-dollar loans and freeze out some borrowers.

Given the current situation in the lending field, take the tie to shop around and find the most suitable loan option for your financial needs. Consider working with a reputable alternative online lender of business loans that guarantee quick access to working capital with the safest and cheapest terms possible.

Loan Price Caps: Good or Bad?

The issue of price restrictions on loans is something you can’t ignore. The pricing of loans is surrounded by controversies. Some find it good, others consider them harmful.

Author Bio: Michael Hollis is a Detroit native who has helped hundreds of business owners with their (business loans) solutions. He’s experimented with various occupations: computer programming, dog-training, accounting… But his favorite is the one he’s now doing — providing business funding for hard-working business owners across the country.

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