Author: admin

  • PDLs in Arizona

    Business Week is reporting that payday loan efforts in Arizona are pretty much done.  A new bill was abruptly removed from the agenda Tuesday, and the committee’s chairman, Sen. Jack Harper, said “they never had the votes.”

    Arizona has 650 licensed payday loan stores.  Some will stay open offering car title loans, prepaid credit cards and check cashing.

    I don’t think you can fight demand.  The industry will find a way to serve customers.  This is a very similar situation to Ohio, where interest rates were capped at 28%.  The industry is still operating under an alternative law.

  • Cash Store buying Sask. regional payday loan provider for $4.4 million

    Cash Store Financial (TSX:CSF) announced Tuesday it plans to acquire EZ Cash, a regional payday loan provider with 14 locations throughout Saskatchewan.
    I pulled out the old calculator, and that’s about $315k/store.  Not bad.

  • Amusing in Arizona

    In a blog on AZ Central, Laurie Roberts writes about the possible resurrection of payday loans.  It’s a conscending article, but it did not stop the newspaper from advertising payday loan keywords in the text of the article.

    “…payday loans and their 400% interest rate…”

    This comes down to the perception.  The newspaper will advertise payday loans b/c it means revenue, but they love to bash payday loans b/c that’s what people want to hear.  The general public does not want to stick up for an industry that’s making money.  Even Google gets harassed by consumer groups and they give everything away for free.

  • Thought provoking article on Illinois

    This article titled “Americash Takes Its Cash-Strapped Customers To Court” totally bashes cash advance lenders in Illinois.  It’s main gripe is that most lenders are offering loans greater than 120, so they do not fall under some prohibitive payday loan laws.

    This article attacks Americash, who is a big player in Illinois, for taking borrowers to court and getting court ordered wage garnishments. Most of these cases result in default judgments b/c the defendants do not show up to court. What they do not mention is that this is a civil court. If the debtors show up, they’ll likely get off very easy.

    There is currently a bill out there that will cap installment loans at 99% interest.  This would effectively push all cash advance lenders into payday loans.  You can read more about that bill here.

  • Krugman, Payday Pundit and my opinion

    Payday Pundit published a post titled “Do I agree with Paul Krugman?” It has to do w/ the new finacial reform bill that’s backed by the White House.

    I agree w/ Payday Pundit b/c non-financial institutions, like payday lenders, did not create this mess.   Why are we getting pulled into it?

    I also agree w/ Krugman that we can NOT rely on public officials to show wisdom and do the right thing.  The problem w/ Wall Street is the people that tanked the economy are making the rules.  Moody’s should be out of business.  AAA rated bonds should never, ever default.  They did.

  • Minnesota D.A. goes after unlicensed Internet lenders

    Minnesota allows payday lending. They have a goofy fee structure:

    $5.50: $0-$50; 10%+$5: $51-$100; 7% (min. $10) + $5: $101-$250; 6% (min. $17.50) + $5: $251-$350 (After default: 2.75% per month)

    In 2009, they required Internet lenders to be licensed in the state. The DA is going after the following lenders: East Side Lenders of Delaware, Global Payday Loan of Utah and Jelly Roll Financial of Virginia b/c they’re not licensed and they’re charging more than the state allows.

    We see these Internet lending law suites popping up more and more. Recently, we had an article titled “To get licensed or not to get licensed? That is the question.” I get this question a lot from people trying to get into the business.

    Now, I know that every lender has their own defense like, “We’re not doing loans in XXXX.  We’re doing loans in Delaware.”  That’s not really the point.  My opinion is that no amount of money is worth the aggravation of criminal charges.  Also, how do you sell an illegal operation?

  • Arizona looking for alternative models

    Arizona lenders are trying to find an alternative product.  This would resemble a product that we see in Ohio.

    This is what I thought was interesting about the lender’s strategy:

    “They also are using a procedural maneuver of a “strike-everything” amendment that will be considered Wednesday by the Senate Finance Committee. That would strip the new language onto an unrelated bill which already has been approved by the House.

    That means just a single public hearing on the issue: If the committee approves, the bill goes to the full Senate and then back to the House to concur with the changes, with no need for an additional hearing there.”

    If the lenders can get a few concessions, here is what they stand to make:

    “borrowing $500 for two months, with a payment at the end of each month, would have to pay $37.50 for the origination fee, another $22.62 in interest plus the $10 document preparation fee, for total charges $70.12.”

    My calculations are closer to $73.72.  Here’s what the TILA box would look like:

    FEDERAL TRUTH-IN-LENDING DISCLOSURES

    ANNUAL PERCENTAGE RATE
    The cost of your credit as a yearly rate.
    115.4002 %    		 FINANCE
    CHARGE
    The dollar amount the credit will cost you.
    $ 73.32     		Amount Financed
    The amount of credit provided to you or on
    your behalf.
    $ 500.00     		Total of Payments
    The amount you will have paid after you have made all payments as scheduled.
    $ 573.32

    Payment Schedule: One payment of $285.66 is due on 5/3/2010. 

  • Bill would cap payday loan interest for jobless

    “Assemblywoman Nancy Skinner (D-Berkeley) introduced a bill that would cap interest rates for loans to the jobless at a percentage so low it would all but eliminate payday loans.”

    I know unemployment is at a very high level,  but do we need a law for every little thing?  My big question, would this include borrowers who do not receive a W2 and are on social security benefits?

    This is a California bill.  You can read the article in the LA Times.

  • Missouri bill gets blocked

    Thanks Payday Pundit for the update on Missouri.  Republican leaders block the bill from making it to the House floor.

    You can read the source article titled “Payday Loan Bill Rejected.”

  • Dueling bills in Wisconsin

    As read at WisPolitics.com:

    Senate Bill 530 currently calls for a $900 limit on the size of payday loans, place zoning restrictions on payday lenders and allow one rollover loan for customers who fail to pay initial loans. The state Assembly’s version, Bill 447, would impose a limit on loans of $600 or 35 percent of biweekly income, whichever is less, and would ban rolling over loans from one paycheck to the next, as well as auto title loans. But neither proposed bill has included restrictions on initial interest rates.

    It would be a shame if they were to ban title loans.   Sure, you can lose your car, but I think people realize that.  The reality is that most lenders do not want the car.  They want to get paid.