Author: admin

  • Mortgages, scape goats and the payday lender

    People just believe what they want to believe. Having been part of the PDL industry for quite awhile, I’ll say that the payday loan product has absolutely nothing to do with the mortgage crisis.

    In the end, most of the people that consumer groups “look out for” don’t want to pay anyone back, if they don’t have to regardless of the interest rate. I can’t believe the junk newpapers will print.

    Deeming Illinois “the Wild West of payday loans,” about 75 people from across central Illinois gathered Saturday at First Presbyterian Church downtown for a predatory lending summit. But it was visual bits that portrayed the Central Illinois Organizing Project’s most graphic messages, including a mock funeral with black-draped coffin marked “the American Dream”

    Well guess what, the people that offer services have a right to “the American Dream” also. There is definately a happy medium between 36% and 600%. Lenders are moving towards regulation. The biggest problem I see is that the people who want to get rid of the payday product probably don’t use it.

    Here is a much better (and hilarious) explanation of why we’re in a mortgage crisis.

  • TV series about payday lending family

    The rumors are true. From two of the writers/producers of the Sopranos comes “Easy Money”, a story about a mom and pop payday lending operation.

    It’s hard to say what this type of publicity will do for the industry. I think one of the biggest misconceptions of the PDL industry is that these companies are small operations. The truth is that there are some pretty large players

    I guess we’ll see.

  • Payday lenders are filling the huge credit gap

    I wish everyone could borrow at 8% interest, but unfortunately, this is driven by our credit systems. The way things work is that you’re essentially placed in a risk group of similar borrowers. In this large group, the people that pay end up paying for the people that don’t pay.

    This is the single hardest concept for so called consumer groups to understand.

    This article does a pretty good job of explaining the payday loan industry in Illinois.

    One comment, I think that it’s very disingenuous for Tim Riggenbach, manager at Associated Bank to tell people “There are options to payday loans. People need to talk to their banker.”

    I want people to be able to borrow at the lowest rate available to them, but this is a joke. I know there are some credit union’s offering similar products, cheaper; but a bank will ask you what you own to find out if they can do a home equity loan or just run your credit. If they can help you, be prepared to wait two weeks and good luck. This is a big “IF”.

    Interestingly, what we’re finding is that borrowers like loans that they can pay off in installments over 6 months.

    There is a huge credit gap between 36% and 521%. Instead of capping rates, lenders should try and fill the gaps.

  • C.O.A.S.T sides with payday lenders

    In an interesting turn of events, the Coalition Opposed to Additional Spending and Taxes (C.O.A.S.T.) is urging voters to shoot down the law recently passed in Ohio that would cap rates, but more importantly establish a state regulated database.

    This article is very interesting for a couple of reasons. I would like to share the comments made by Jason Gloyd, who is the chairman of C.O.A.S.T.

    “Orwellian” provisions, such as the establishment of a database of loan transactions with personal information; the limiting of payday loans to four per person per year; and an education program for anyone who takes out a second loan within 90 days.”

    “Let us make our own decisions and stop interfering with our lives,”

    “Most importantly, stop tracking our behavior – and stop trying to modify it.”

    Amen brother. In an attempt to help people, the government is just making people dumber. If we take away people’s ability to make financial decisions, we keep them at the bottom.

  • Advance America closes in Arkasas

    Advance America and the Attorney General of Arkansas agreed to disagree and the compan will move out of Arkansas by October 31st.

    Arkansas makes up less than 1% of Advance America’s revenues, so they decided it was not worth the fight. You can read the full article here.

    The Arkansas Supreme Court next month will hear arguments in a lawsuit challenging the constitutionality of the 1999 Check Cashers Act, a law that advocates say payday lenders have tried to use as a shield in charging triple-digit interest rates. Arkansas’ constitution sets the state’s usury limit at 17 percent. If this lawsuit passes, lenders will most likely be allowed to move back into Arkansas.

  • 13,000 Ohio signatures thrown out

    “On Friday, payday industry-backed Ohioans for Financial Freedom agreed to take back 12,928 signatures it had paid California-based Arno Political Consultants to collect in favor of a fall ballot issue that would ask voters to repeal the new law.”

    13,000 signtures is not a lot considering the total required signatures is about 241,000. Still it’s an obstacle that needs to be over come.

    You can read more here.

  • Limits on payday lenders rejected

    In Sprinfield, Illinois there will not be a restriction on payday lending stores. The city council rejected a measure that would require payday loan stores to be atleast 1500 feet from one another. Here is the full story.

    Putting these types of restrictions is justa bad idea all the way around, but especially for the borrowers. Competition usually will bring rates down. Isn’t this what everyone wants?

  • Arizona vote is in November

    The November vote in Arizona is coming up. Here is what the ballot will look like based on Judy Hedding’s blog:

    Will you vote in favor of Proposition 200?

    1. Yes, we need to continue to offer these financing options to our citizens while more closely regulating the industry. People should be able to make their own financial decisions.
    2. No, payday loan businesses are predatory lenders that exploit the financial hardship of people with limited resources. We don’t need them.

    A “Yes” vote endorses the payday lending site and a “No” vote gets rid of payday lending.

    In other news, “Attorney General Terry Goddard said he usually steers clear of publicly picking sides on a ballot measure, but he’s changing course when it comes to a proposition pushed by payday lenders.” Goddard also went on to say that “payday lenders “trap” Arizonans into expensive short-term loans.”

    What Goddard fails to recognize is that the regulation supported by the payday loan industry is designed to keep people out of the debt cycle.

    It also offers many other protections like: the rate would be capped at 391 percent, and it would prohibit costly loan extensions and require the state to create a database so lenders could ensure that prospective borrowers had no outstanding debts with other payday lenders.

    Let’s be honest, the state database is not working everywhere and lenders offer other loan products that fall outside the statute.

    In return, it also removes a provision in state law that would essentially eliminate the industry in 2010. This provision would cap rates at 36%.

  • Arizona still polarized

    Both sides make very good arguments. On one hand, it’s a tough world. On the other hand, people should have the freedom to choose.

    Stan Barnes makes some good arguments in this opinion in the Arizona Daily Star, especially this comment:

    “Every day it seems another self- appointed know-it-all with an ax to grind is in the news, blaming payday lending for all of society’s ills and demanding the industry be run out of town before every one of us is beguiled into bankruptcy.”

    The truth is that everytime someone takes out a payday loan, they say “Yes”. Everytime they don’t take one out, they say “No”.

    People fail to recognize that there are rules in place and these places are regulated.

    Where I think the industry gets in trouble is that they claim they’re saving people from paying nsf fees, but when the borrower doesn’t pay, they deposit their check. If it bounces, the consumer ends up paying the interest and the nsf fee that they tried to avoid in the first place. There is also post maturity interest and late fees. Sometimes the borrower gets more than they bargained for.

    In the industries defense, there are way too many people not paying loans back. There needs to be a healthier medium.

  • What is Predatory Lending

    Predatory lending is a vague term. I think this is a very good assessment and opinion by J. R. Clark Ph.D., University of Tennessee Chattanooga. He thinks:

    “Predatory loans, on the other hand, are loans obtained by the lender through deception or fraud, and do not enhance the welfare of borrowers. It is a disservice to the public to confuse loans which are truly predatory with those that are simply expensive.”

    He further writes that capping interest rates or that usury ceilings hurt low-income families most and that it just locks out the bottom of the credit pool or the poorest and worst off people. Here is the full article.

    I don’t think anyone expects people to “like” payday lending, but it’s an option. If there was a better option out there, people would be using it.