This is an ugly bill. They’re effectively going for 36%.
Payday Pundit writes “…day ruiner.”
Category: 36%
-
…they outnumber Starbucks and McDonald’s combined in the state…
There has been another siting of the infamous “they outnumber Starbucks and McDonald’s combined in the state.”
Can someone remind me again, what their point is? I still can not figure it out.
The article titled “Payday loan bill heads to committee” addresses HB1351 in Colorado. The bill is trying to cap rates at 36%.
-
Same story different state
Wisconsin is the latest state to propose a 36% cap on loans. Currently, Wisconsin does not cap rates. The average rate is about $20 per $100, roughly an APR of 521% for a 14 day period. A 36% cap is $1.38 per $100. You do the math.
With all this being said, I think congressman is a bit disingenuous:
“Wisconsin is the only state that does not set a rate cap for licensed lenders, said the plan’s author, Rep. Gordon Hintz, D-Oshkosh.”
It’s one thing to not have a cap. It’s another thing to make it 36%. That’s just putting people out of business.
Wisconsin does not have a ton of stores. As of 2008, there were 530 store fronts.
You can read the full article in the Chicago Tribune. To read the response from the Wisconsin Deferred Deposit Association, head over to Payday Pundit.
-
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.
-
Tim Miller provides great example for payday loan pricing
In this open letter to the Hudson Hub Times, Tim Miller equates a payday loan to an annualized interest rate or APR to staying in a hotel room for one night compared to a 1-year lease.
His point is that most people do not rent hotel rooms on a monthly or yearly basis, so quoting the room as such would not make sense.
That’s been the flaw of the of the consumer groups. Most of them just try to inflame the public into feeling guilty. That’s how they win votes.
What they don’t realize is that financial literacy does not get taught in the classroom. You learn it on the streets. The hard way. The good news is once you know it, now you can move to the next level.
-
Congress may try and regulate payday loans….out of business
The House of Representatives are putting together a bill that would effectively cap interest rates at 36%. The AP News reports that several shares of publicly held payday and pawn lenders stock price took a hit for a second straight day. Anecdotally, most of the stock market has been taking a hit, so this news could be completely incidental.
The truth be told, even if this bill never sees the light of day, the impact this will have on public opinion will be felt.
I would love to get a clarification on this point. You can still charge 36% interest and product a triple digit APR, if you’re able to charge fees on top of the loan. Payday lenders have claimed from the beginning that their fees are not interest.