Author: admin

  • More 36% jabber

    Unfortunately, the people in office don’t know what it’s like to need $500 yesterday. Payday loans may hurt people that use them incorrectly, just like anything else in life. If you drink too much water you can die.

    What solution do these legislators have for people in need of a car repair or a repo or overdraft? Without saying it, they’re slamming the door on borrowers.

    We get it. You don’t like payday loans, but aren’t payday loans a solution for some people. Why would the goverment penalize the people that use it responsibly?

    This article in the channel 5 news feels the same way.

  • South Carolina still teater tottering

    The payday loan industry in South Carolina is trying to get the legislature to ease up on regulations imposed last year.

    This year, on a 27-14 vote, the Senate rejected a bid to limit payday loans to the lesser of 25 percent of a borrower’s income, or $500, and imposed a seven-day cooling off period between loans.

    Payday lenders do not want a cap on loans and can live with a two-day cooling off period. The payday loan industry has spent over $300k on lobbyist and political contributions. Let’s hope their side gets heard.

    Completely marginalizing lenders or making it impossible to borrow is not the solution.

    You can read more about payday loans in the The State.

  • Illinois trying to cap rates at 99%

    In Illinois, a payday lender can provide a 14 day cash advance and make $15 per $100. The problem is that the state database limits what people can borrow and completely eliminated rollovers by a cooling off period. Under this law, the industry would take a big financial hit. Ironically, this act was supported by the large national payday chains.

    The PLRA act covered loan that were less than 120 days. So lenders put away their payday hat and started operating under CILA (Consumer Installment Loan Act). This covers any lender that loans money up to $25k on a single loan.

    Payday lenders began offering 120-180 day installment loans. When national payday operators started losing customers to the installment lenders, they started offering installment loans too.

    The PLRA loan was way to overbearing for borrowers. People cannot stand to be treated like children.

    My theory is that this 99% bill is aimed directly at payday lenders. The reason 99% works is that it does not step on the toes of the large banks like HSBC, which offer loans routinely at 36% and greater.

    SB1435 is getting steam. Its passed the Senate on April 2nd and is not in the house. I find this page the best way to track a law. If you’re really bold, you can try and follow this flow chart of how a bill becomes a law in Illinois.

    You can also read more about Senate bill 1435 at Progress Illinois.

  • An Open Letter to Congressman Gutierrez

    I found this letter at Payday Pundit. It’s a plea to Rep. Guitierrez to not cap rates on payday loans. The letter is well written and consice.

    Personally, I think Rep. Guitierrez is sticking his neck out on this issue. I believe he realizes that there is a need for a cash advance product. Payday loans are very polarized and most politicians are afraid to speak the truth.

    Thanks to Payday Pundit for always providing the good stuff for our industry.

  • A very sticky class action suit

    Money Mart and Dollar Financial Corp are being sued for allegedly charging an illegal check cashing fee that violated Canada’s small loan laws. The class action is looking for $185M by 264,000 former borrowers for check-cashing fees and interest plus punitive damages between 1997 and 2007.

    Vancouver based Money Mart is claiming to only have a received a small percentage of the proceeds, siting the franchise owners as the main beneficiaries of the deal. They also contend that many fees could not be considered as interest. The trial is scheduled for May 4th.

    I’m a bit confused b/c I was under the impression that payday loans in Canada are not illegal.

    You can read the full article at Bloomberg.

  • The problem with consumer groups

    Spokeswoman Kathleen Day for the Center for Responsible Lending says “If you can’t make money on that (36%), you shouldn’t be in business.”

    It’s like saying you can’t charge more than 1/30 of a month’s rent to get a one-night hotel room. If a studio apartment is $1000 per month, you can only charge $33 to rent a room for one night.

    Consumer groups should spend less time acting as parents to voting adults and more time educating them. Better yet, why don’t they lend people $300 when they’re in a bind. They would rather just put people out of business.

    Luis Guitierrez is currently sponsoring a law that would regulate payday loans at the federal level. We wrote about this a few weeks ago in a post titled: National Payday Perfect Storm Brewing. Unfortunately, neither side wants it; which means the industry will get to operate for a few more years until every state bans them.

    You can read more in QC Politics.

  • H.R. 1214: Payday Loan Reform Act of 2009

    This is just an update. The act lost one of their sponsors, Rep. Raul Grijalva of Arizona (D). What’s worth sharing is this page. It will show the progress of the bill.

    Luis Guitierrez is the head of the House Financial Services. This is where they clean the bill up.

    This bill would be the first of its kind for payday loans. It’s competing with another bill sponsored by Dick Durbin named Senate Bill 500: Protecting Consumers from Unreasonable Credit Rates Acts of 2009.

  • Credit unions push into payday loan business

    Credit unions are seeing oppourtunies to offer payday loans. I think this is great for the industry. Competition drives prices down and gets more people using the product and keeps legislators from blacking out a state.

    The reality is that payday lenders have a much different cost structure than credit unions and banks. Tom Linafelt, spokesman for QC Holdings, owner of the biggest chain of payday loan shops operating in Missouri says “One of the great myths of our industry is that we are making huge profits,” Costs consume $10 to $12 of each $18 loan fee on a $100 loan, he says. His company, based in the Kansas City suburbs, earned a $13.6 million profit last year.

    Payday lenders are at a huge disadvantage b/c they do not control the checking account, like credit unions and banks. The charge offs are much higher.

    One thing for certain is that payday loans are big business in Missouri. Almost $870M in loans accruing yields an estimated $157M in fees annually.

    Read the full article at the St. Louis Post Dispatch.

  • Payday loan industry dodges bullet in Washington

    In a 25-24 vote on Wednesday, the Senate rejected the House’s request to pass a bill that would limit the size of a payday loans to 30 percent of a person’s monthly income or $700 – whichever is less; barring people from having multiple loans at different payday companies, and setting up a database to track the number of loans taken out by individuals.

    You can read the full article in the The Seatle Times.

  • Check ‘n Go exiting Virginia

    It’s not a done deal, but Check ‘n Go is probably going to stop offering payday loans in Virginia. It’s likely they’ll pull out all together.

    Check Into Cash is closing 19 of 64 stores — idling about 60 workers — and shifting to pricier, lightly regulated open-ended loans.

    With 150 stores in Virginia, Advance America hopes to use a narrow provision in the latest clampdown to continue simultaneously offering payday loans and open-ended loans.

    You can read the full article in the Richmond Times Dispatch.