Author: admin

  • Sen. Dodd taking heat over support of payday loan industry

    The Huffington Post is giving Senator Dodd for allowing the OLA (Online Lenders Alliance) for sponsoring a dinner. Now, did they actually sponsor the dinner? No. Why not?

    The OLA are voters just like anyone else. Why can’t they get their story heard? This is just another chapter in the negative payday loan image saga.

    I think people need to be completely upfront about payday loans. People talk out of both sides of their mouths. They think payday loans are bad, but these borrower’s friends and family do not want to lend them $500. The landlords, utility companies and car mechanics of the world secretly love payday loans.

    Unfortunatly, many larger payday lenders have to get tough with collections b/c their getting screwed by class action attorneys and fighting laws that will put them out of business. Who pays for that? The borrower.

    You can read the full article here: Dodd Dinner with Online Payday Lenders Transforms into Fundraiser.

  • Florida credit union offering 18% installment loan

    If you can make money at 18%, more power to you. Let’s not confuse a good intention with the actual result. I hope they make numbers available after a year.

    Family First Federal Credit Union has rolled out a new loan that will not
    deny an applicant based on their credit score.

    The Credit Rebuilder loan
    amount is up to $1,000 at 18% interest up to 12 months. Once the loan is paid
    off, the member can qualify for an additional $500 totaling $1,500 on all new
    loan requests. Applicants must be a member of the $169 million Family First FCU
    for at least three months, have direct deposit and be employed for a minimum of
    three months not including seasonal work.”



    Now, we’ve seen this before and it’s ironic that you never hear a follow up story. In Illinois, South Side Community Federal received a $50k subsidy from Chase bank. The end result? They never tell you. The do offer a PAL (payday alternative loan). Here’s the catch: If your credit score is under 650, you have to put up $250 in cash as collateral to get up to a $500 loan.

    You can read the full article in the Credit Union Times and get some commentary on Payday Pundit.

  • Fair and balanced article about the state of cash advance loans in Ohio

    It’s unfortunate that in Ohio, you can’t call a cash advance a payday loan anymore. Sure it’s just a name, but it perpetuates the reputation of a payday loan as something bad.

    This article, at Cincinnatti.com is titled “Payday Lenders Drying Up“, is 4 pages long; but does a nice job showing both sides of the debate. For once, they got some actual cash advance customers on the record. I think it’s worth sharing:

    “Are you going to loan me $200 for two weeks for $30? I don’t think so,”
    said Linda Coleman, a 28-year-old machine operator and nursing student from
    Colerain Township. She was borrowing money to cover her quarterly water bill,
    acknowledging she uses short-term loans about once a month.”

    “My personal belief is I don’t think it should be regulated – you should
    personally educate yourself.” Says Mike Montgomery. He actually avoids
    short-term loans because he and his wife know people who’ve “gotten pretty far
    behind” using them. Still, he was sure they “help some people.”

    “Johney Easterling, a 47-year-old maintenance worker at a social-service
    agency who lives in Deer Park, said he borrows money about five times a year. He
    doesn’t see any problem with the fees as long as he doesn’t borrow too
    much.”

  • Successful Payday Loan Businesses are collection business.

    Successful Payday Loan Businesses & Check Cashers are COLLECTION BUSINESSES is the main theme of Jer’s most recent post. I also think it’s the most generous of his posts. The post title is Collections. I think this is especially helpful for the newbies.

    I like this statement, “If it’s not verifiable it’s not collectible.” Approving loans can sometimes feel like a pressure cooker, but you can’t let the data slide.

    Another piece of advice you should write down is “NEVER make threats!” Fear, as a tool, can really back fire. They either turn off or can report you.

  • D.C. announces settlement of car title loans

    I’m a little shocked about this settlement.

    “D.C. Attorney General Peter Nickles announced last week that the District has resolved lawsuits against two Northern Virginia automobile title lenders that have agreed to repay more than $1 million to hundreds of D.C. residents who lost their cars and were forced to pay thousands in interest for loans they took out against their vehicles.”

    Class action law suits aren’t new, but these one is unique. People who live in Washington D.C. would drive into Virginia and take out a car title loan that is perfectly legal in Virginia. The D.C. Attorney General goes after the lenders: Loan Max and Cash Point.

    Businesses do business across state lines all the time. Basic examples are people who buy gas on one side of a county or state line to save a few bucks. I remember driving to Indiana to buy fireworks when we were teenagers.

    What’s equally annoying is the pissed off borrower. Apparently, there are title loan shops lined up and down Washington DC streets lending money at 25% annual interest. I guess if the Virginia lenders apologized and declined his loan, he would have thanked them? It’s like saying to someone we can’t give you a mortgage b/c the government capped mortgage rates at 8% and your a subprime borrower.

    If you want to read the one-sided full article in the Washington Post.

  • Payday bill passes in Washinton state

    On Jan. 1st, payday loans will have tighter restictions in Washinton. Here are the basics:

    • Limits the size of a payday loan to 30 percent of a person’s monthly income, or $700, whichever is less.
    • Bars people from having multiple loans from different lenders, and sets up a database to track the number of loans taken out by people
    • Enacts an installment plan for people who fall behind on their loan payments. Customers would have up to 90 days to pay back a loan of $400 or less, and 180 days for a loan of more than $400 without a fee. Currently, a borrower has 60 days and must pay fees.

    The fees are not capped, so realisticly, they could charge a premium and make the payment plan part of every loan. It could work like an installment loan where you could charge $400 on a $400 loan and give them 104 (90 plus 14) days to repay it. It could be like 8 payments of $100 over 104 days. I just don’t see charging $15/$100 and giving borrowers 100 days to pay it is profitable. Besides, there will be people that do not pay at all.

    You can read more about this law in the Seattle Times.

  • Delaware trying to increase payday licensing fees

    Delaware is trying to increase the license fee for payday lenders by $1500. The governor thinks this will discourage more stores from opening. In my opinion, that’s pretty unlikely.

    I didn’t realize that Delaware has a lot of store fronts. I was always under the impression that Internet Lenders went there b/c of the very liberal tax and corporation laws.

    The article also talks about a group that’s offering a product to replace payday loans. Wilmington’s West End Neighborhood House that offers lower-cost short-term loans at around 13%. Personally, I’m a big fan of this. If you want to put payday lenders out of business, don’t use the government to do your dirty work. Offer a better product than they do.

    I’m pretty confident these groups will only realize that it’s a lot harder to make money lending money than they think.

    You can read the full article at Delaware Online.

  • Payday bill in South Carolina stalls

    It’s the never ending drama in South Carolina. What appears to be a payday loan industry supported bill in South Carolina is stalling. The house of representatives passed a bill that would cap loan amounts at $300 and create a two-day cooling off period between loans.

    I guess the two-day waiting period is not enough for some legislators.

    Jamie Fulmer of Advance America says, “We think specific and direct reforms that protect the consumer’s ability to access payday advance products while affording addition protections for the small number of consumers who don’t use the product as intended is a good thing.”

  • Just a weird class action settlement

    The Cash Store in Canada is settling two class action lawsuits. It should not exceed $14m and will be paid out as vouchers that can used to pay existing debts or future debts.

    It looks like the attorneys got the deal they were looking for and settled the case. These class action attorneys extremely unethical. I can’t believe they can get away with this stuff.

    Sadly, they never really say what the attorneys walk away with in these cases. I guess that’s part of the extortion deal.

    You can read more about this article in TradingMarkets.com.

  • Payday lenders are just filling a demand

    Consumer groups and fanatical religious groups have made payday lenders look like the bad guy in a movie. I’m going to clue people into something. It’s capitalism. Payday lenders are filling a demand that no one else wants to fill.

    Banks and credit unions are getting into the mix, but only because payday lenders created the industry, first.

    The 20th Century pretty much saw an end to illeteracy in the United States. Today, we focus on financial literacy. Consumer groups and others are a huge detriment to financial literacy. They keep people poor by not allowing them to make decisions and then learn from those decisions.

    Taking the moral high ground feels good, but it’s not making people any smarter. People need to be able to make basic financial decisions. We all learn this the hard way, whether it’s credit cards, over paying for your home or taking out too many payday loans.

    The inspiration for this post comes from a post by Lawrence Myers titled “Usury Law and the Chritian Right.” A Critique. It’s long, but debunks most of the stereotypes people have about payday lending.