Author: admin

  • Finally, an independant and reputable payday loan report.

    This is an older post that’s been updated:
    “Instead of regulating prices charged on small, short-term loans, the authors argue that increasing competition will drive prices down” says Signe-Mary McKernan and Caroline Ratcliffe. This new report by the Urban Institute finds that if payday advances are eliminated they “could be replaced by alternatives that make families even worse off.”

    Now, guess who funded this report? They’re not payday lenders. This study was financed by the Charles Stewart Mott Foundation. I think it took a lot of guts. This foundation is committed to supporting projects that promote a just, equitable and sustainable society, since 1926.

    Nobody claims that a payday loan is THE solution, but it can be A solution for some people. This is about choice. This report is saying, don’t get rid of it; lets just get it right.

    Just like no one likes negative loan amortizations or $4 gallon of gas. Imagine if the government stopped selling us fuel when the price goes over $4? It’s just not the solution and neither is making payday loans unprofitable or making them go away.

    Consumer groups should just face the big, pink elephant in the room. There is a huge credit gap in our financial systems. They need to work to fill it and not eliminate it.

    These consumer groups should be empowering peoople, not treating them like children.

    Here is the full report. Please send it to your legislators.

  • Everybody is regulating payday loans

    If it’s not one government body, it’s another. The city of Springfield, Illinois passed an ordinance to require a minimum distance between payday loan stores.

    I don’t think this stuff works, except for creating less competition among lenders, which ultimately is bad for the consumer.

  • Letting the dust settle in Arizona

    Arizona is sitting tight for the sunset clause, which will take into effect on July 1, 2010. Basically, if another law isn’t put into place the rates will cap at 36%.

    I’ve always been against treating these fees as interst, but that’s how people want to see it. One thing that we can agree on is that the industry cannot survive at 36%. Some other type of fee has to be added to the loan.

    I guess we’ll see what happens.

  • Illinois Attorney General Goes after Payday Collection Agency

    We run a business and are willing to pay for results. This case is the exception. AG, Lisa Madigan, has filed a lawsuit against a Jacksonville, FL collections company.

    Now, there are two sides to every story, but threatening a debtor with jail time and losing custody of their children is a line we cannot cross. It’s dispicable.

    Surprisingly, no charges were brought against the payday lender. It looks like they caught a break.

  • Revolving Credit Line Blocked in New Hampshire

    Advance American decided to discontinue a revolving line of credit in New Hampshire after the state’s banking commisioner issued an order to stop.

    Banking Commissioner Peter Hildreth does not think that the product complies with state law. In July, New Hampshire capped interest rates at 36% for payday and title loans.

    It’s hard to say if Advance America will continue operations, but 36% is not possible. If banks cannot offer this product at 36% and direct access to borrowers checking accounts, how can anyone else?

  • Payday Loan Reform Back in Illinois News

    Republican Joan Krupa has nine days left in her term. She was beat by Democrat Aaron Schock in this year’s election. Ms. Krupa has introduced one single bill that has no chance of advancing. The bill wants to cap payday loan rates at 36%.

    Considering the fact that she will be out of Illinois politics in nine days, she would have more luck starting herself on fire than getting anyone to notice a self serving bill from someone on their way out.

    I think payday lenders in Illinios are safe for now. I don’t know if anyone’s paying attention, but their trying to impeach some guy named Rod Blagojevich.

  • Payday lenders up on analyst upgrade

    Analyst Henry Coffey Jr. thinks that President-elect Obama is going to be too busy with the economy to focus on payday lending.

    Investors seem to agree with him. EZ Corp and Cash America shares rose on his announcement.

  • Will Obama Cap Payday Loan rates at 36%?

    We don’t have enough information and we don’t know how high it is on Obama’s list of priorities. One thing we do know is that he likes the 36% number. Here is a linke to his entire plan.

    At the end of the day, he’s still a politician. President-elect Obama will also have a lot more pressing issues like: the Iraq war, healthcare, terrorism, the environment and taxes.

    I just hope that he realizes you just can’t put people out of business. The demand exists for small, short-term loans.

  • Why the media tells half truths about payday loans

    I was reading this article. It had all the elements of a sensational story. The little old lady, during the holiday season and the $1700 balance on the $600 advanced.

    She leaves a great sound bite: “When I got these papers in my hand and got to looking at them, I thought, I’m being stolen blind.”

    The article left out some critical information. This is a simple interest loan and you can pay off at anytime without incurring a prepayment penalty. It this loan is paid in 14 days, for $600, this loan will accrue about $3 per day. So if they pay it off the next time they get paid, they’ll pay at most $50. If she borrowed $300, it would be more like $25. An NSF fee is more than that.

    Notice her son paid the loan, but they don’t say how much was actually paid. The news only wants you to see $1700 on $600. It’s like saying your $300,000 home (at 7% interest) is going to cost you $718,000 over 30 years. It’s accurate, but does not tell the whole story. With this logic, they would make mortgages illegal.

    I used this consumer loan calculator to play around for the numbers. I think the lender’s math is wrong. A $600/12-month loan would cost $1536.66 and carry a monthly payment of $129.14.

    I’m glad that 81 year-old Mattie Anderson looked at the contract and understood the transaction. By law, that’s what’s important.

    The payday loan industry needs to be upfront and honest. What the general public does not realize is that lenders turn away a lot of borrowers. This means that there is a market at work here.

    The point is not to prove to the general public that they should take out a payday loan, rather to get them to accept the need for this type of a product and not condemn it.

  • Everyone is blaming payday loans

    “Payday loan customers who are approved on their first application are more
    likely to file for bankruptcy than those whose initial applications are denied,
    according to a study out of Vanderbilt Law School.”

    This article title “Payday loans create bankruptcy danger” places an interesting spin on things. What it proves is that payday lenders will just not give a loan to anybody.

    I also believe that this finding is purely incidental. Most of these people would have filed bankruptcy anyway b/c of the combination of credit cards and negative savings.

    To further discredit this study, many people do not have enough debt to file for bankruptcy. People who are denied a payday loan sometimes do not make enough money to qualify.

    Bankruptcy has 100% to do with personal responsibility and not payday loans. If you want to blame payday loans you should also blame: consumerism, credit cards, low wages and my dog.

    The problem today is that it’s part of the credit system and the intellectuals of the world just want to point the finger and scapegoat this community.