Author: admin

  • Comments in California

    Lately, I’m more interested in what people are saying and not the media.

    Here are some comments from an opinion in the Merced Sun-Star. Legislators are looking at increasing the check value of a payday loan to $500 from $300. Personally, I think it’s a good idea.

    zaphoid wrote on 07/07/2009 01:03:35 PM:
    If you don’t have access to legitimate credit, you have no business borrowing money. If you are desperate… you planned poorly. Mr. Example should have been putting some of the 150$ away every month for car repairs. If he can’t afford to fix it, and screwed up his credit to the point that he has to get a loan with a 400% annual interest rate… well… so sorry. As far as I have seen these places are pretty darn up-front about how much you are paying. You write them a check…. and they give you cash. How much more obvious can the cost of the money be made?
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    Joan wrote on 07/07/2009 11:50:46 AM:
    A sharp auto repairman would work with you on the family car costs and reap the profits as well as the work. If I pay 1/3 of the bill up front, 1/3 on pay day and the final 1/3 the next pay day or something similar. It’s pretty close to bartering, but not quite. It’s good to have tangible collateral to hold. Has anyone compared the pawn shops to the payday loans? Nobody says anything about pawn shops.
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    righttochoose wrote on 07/07/2009 10:30:59 AM:
    In your words “So when the family car breaks down and needs repair, he takes out a two-week payday loan for $300, paying a fee of $45.” He has choices; overdraft his bank account that will be $35 plus everyday the account is overdrawn a daily fee that will easily exceed $45, bounce a check to pay for the repair, $35 to the bank then $25 to the auto shop = $60, or not pay for the repair and lose his job.36% eliminates payday lending, but it does not eliminate the need for the service. Customers should have the right to choose what financial products they use and should get full disclosures of the fees. Payday lenders already do that but you have to read the fine print on a bank statement to get the same understanding of account fees.
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    realsolutions wrote on 07/07/2009 08:21:20 AM:
    First of all, these are private transactions between consenting adults, and if the pay-day loan outfits were not filling a need, they would not exist. What right does the state have sticking its nose in this situation? If the state intervenes, some of these outfits might go out of business, and then where will their customers go? There could be unintended consequences, such as more robberies and thefts.But secondly, does anyone else find it strange that a legislature that has spent California into bankruptcy is trying to “fix” a business arrangement between willing borrowers and willing lenders? I think it’s a hoot. The legislature needs to get its own house in order before it tries to “fix” other businesses.
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    Joan wrote on 07/07/2009 07:30:44 AM:
    Loan sharks have existed since the beginning of civilization. It will cost you to try to get rid of them.
    Recom

  • Credit Unions competing with payday lenders

    Credit Unions offering some type of payday loan alternative is nothing new. What I think is worth sharing are the comments left on this article titled N. Texas credit unions plan to compete with payday lenders.

    rgvcowboyfan wrote on 7/2/2009 4:21:43 PM:
    Credit unions do not lend you if you have had a tough financial time in the past even though you may be working on improving your finances. Pay day loan companies do not look at your credit score, only at your current ability to pay.

    valtwin wrote on 7/2/2009 1:14:11 PM:
    Two totally different clienteles. The CUs will only be in competition amongst themselves.

    We provide payday loan software for many lenders, and I find payday lenders are much more leniant with, not to mention forgiving, of their customers. This goes a long way. Payday lenders are open to re-lending to customers that have been a late payers are delinquent in the past. I don’t think credit unions or banks are like that.

    The point is that you can make a cheaper product, but is it necessarily better?

  • Obama’s plan

    “President Barack Obama asked Congress on Tuesday to create a new agency to police the fine print on credit card bills and mortgage documents and determine what fees, penalties and interest rates are fair.”

    Unlike mortgages and credit cards, I think payday loans are very straight forward. If you have not figured out that rolling over a payday loan more than 3 times is a really bad idea, then payday loans are not your biggest problem.

    Now, I believe the payday loan industry should provide complete disclosure. For the most part, I believe it does. For example, it’s common for the promissory note to display:

    CUSTOMER NOTE: Payday advances should be used for short term financial needs only, not as a long term financial solution. Customers with credit difficulties should seek credit counseling.

    OR

    YOU CANNOT BE PROSECUTED IN CRIMINAL COURT TO COLLECT THIS LOAN.

    Everyone should read this article in the Associated Press titled “Administration sends Congress consumer legislation.“

  • Study: Payday loan users say they have no other options

    How do consumers win, if the legislature gets rid of all the competition? Everyone wants banks to offer payday loans. Some do, but most stay away from it b/c of the stigma and they can’t charge what they need to.

    This Kentucky study is basically saying that people that use payday loans do NOT have any other options. Once again, supply and demand collide.

    This study is not pro payday lender, but there are some good facts.

    A survey of low-income families in nine Kentucky counties showed that many turned to payday lenders because they couldn’t access traditional loans or other banking services.

    You can read the full article at mcclatchydc.com.

  • PLS Financial Services offering payday loans to the unemployed

    PLS is 28th on the Crain’s Fast Fifty list of fastest-growing local companies, although revenue is down this year. In 2008, this privately held company did $218M in revenues.

    President Bob Wolfberg says:

    “If you believe there’s nothing wrong with (this type of) loan, why should (the unemployed) be any different from someone who has any other form of income?”

    I would not give a loan to an unemployed person, b/c I don’t think they can pay it back. Bob does make a pretty good point. For the record, these loans to the unemployed account for less than 1% of their portfolio. Almost jokingly, “I don’t think we’ve paid for the cost of the banners” in PLS storefront windows proclaiming that unemployment benefits qualify.

    You can read the full article in Chicago Business magazine.

  • The Bite of Bank Fees

    Banks are raising their NSF fees. The average fee increase $2.50 to $27.50 this year.

    The thing with NSF’s is that since banks charge them, they’re ok or acceptable. I wonder why that is?

    Here is a NSF horror story.:

    Bank customer Laurie Harris:

    Early last month, she deposited money into her Bank of America checking account, but the check did not clear before several charges were posted. Each time Harris overdrew her account, she paid $35, totaling nearly $300 in fees in May. That set off a chain of events that has left her with about $600 in overdraft fees this month.


    You can read the full article in the Washington Post title The Bite of Bank Fees.

  • Guilty plea in payday loan scheme

    “Alvin Allister Ambrose, 37, the owner and operator of First Cash Express, faces up to 8 years in prison and fines of up to $75,000 misuse of over $5,000,000 solicited from 180 investors to provide “payday” loans to borrowers with high rates of return to the investors.”

    A lot of the money was misappropriated for personal use for real estate speculation business, a Carribean cruise, diamond rings, furniture and his wife’s law school tuition.

    You can read the full article here.

  • The (alleged) real history of payday loans in Virginia

    This article is a response to an article that hammered Republican Del Oder of Virginia. He’s largely responsible for putting 35% of Virginia payday lenders out of business.

    Just curious, how does that help borrowers?

    He’s basically saying that the payday law passed in 2002 was in response to the bank rate export model where lenders would rent a bank charter to get around state laws.

    Anyway, the article is worth reading.

  • Virginia editorial just wrong

    An article out of Lynchburg, VA had this to say about the payday loan industry:

    “… (General Assembly) failed to take the step that would put them on the same playing field with other financial institutions that loan money on a short-term basis to those who need it. That step, of course, is the 36 percent interest rate cap on an annual basis — the same cap that applies to other lending institutions.”

    And who are these institutions that are offering short-term cash at 36%? There may be one or two, but that’s it. I don’t know how to sugar coat this, but this type of statement is a blatant lie.

    You can read the full article here.

  • New California bill tries to raise loan amount to $500

    Currently, you can only get a loan for up to $300 in California. Actually, that’s the face value of the post dated check. The reality is that the advance amount is typically $255.

    A new bill AB377 will try and raise this amount to $500.

    If you would like to read more about this developement, you can go to the Payday Loan Industry Blog.