Google is cutting ties with payday lenders by getting rid of ads that come from payday loans. Google will start this transition in July, eliminating ads for loans with a term shorter than two months. In addition, if the loans have an interest rate higher than 36%, they will also no longer be shown in search results.
Car loans, mortgages, student loans, commercial loans and other ads for these types of loans will not be affected by these new rule. The search giant also explained why they decided to make this change with payday loans. Saying that after research, they found out that payday loans can result in unaffordable payments and high default rates.
This move has been met with a lot of support as the payday loan industry has been criticized because these lending companies charge very high effective rates; this is a result of consumers using new loans to pay off old loans. Borrowers also tend to get charged large overdraft fees and have their bank accounts taken down because of these efforts by payday loan lenders.