The Kitsap Sun reports that the state ordered Moneytree to stop allowing borrowers to use and then “rescind” small loans and stick to an eight-loan limit. Rescinding the loans allows a borrower to have a clean slate.
Moneytree has over 35 locations in the state of Washington. They also operate in California, Colorado, Idaho and Nevada.
Check ’n Go spokesman Jeff Kursman said the company, which has 1,100 loan shops nationally, will close all its Washington locations by Jan. 1.
This is not as shocking as it may seem. They currently have 3 locations, but do not see the point in expanding in a state with heavy restrictions.
The state of Washington is limiting each citizen to 8 loans a year and capping those rates, not to mention; income restrictions.
Read more about payday loans in Washington.
On Jan. 1st, payday loans will have tighter restictions in Washinton. Here are the basics:
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.
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.
This article in Seatle Weekly prompted me to write this. I think the state would be better off creating incentives for people to create saving’s accounts than making payday loans tougher to get. These legislative sessions are a joke. What’s the point in making lenders miserable over frivolous laws?
These law makers are trying to save a small percentage of borrowers, through the legislative process, that are just looking for a bailout.; but what’s new in this country.
The more legislators feel sorry for people that get themselves into a spiral of debt, the less responsibility these borrowers take. These people get weeded out of the system naturally through credit services like Teletrack and CL Verify.
If you take the mortgage industry for example, I believe that it’s not high interest rates that’s causing people to default on their loans. They’re either losing their jobs, which is understandable. Or they want to walk away from a house that their upside down on b/c they bought it with very little or no money down. They figure why keep paying the mortgage if I will owe the bank $30k when I sell it? Living for free for 12 months until they foreclose is a better deal for them. I find it hard to believe that the bank gives a person $300k to buy a house; and now that person is mad at the bank?
In the end, when people don’t pay their obligations, they’re really only screwing other people that want to get a loan.
Laura Onstot’s article titled, “Key To Payday Bills? Make Sure Both Sides Hate It” is pretty funny. I’m also giving Laura some credit for giving the facts and offering a balanced synopsis of the payday industry in Washington.
The reality is that people don’t want payday lenders to go away, just like they don’t want oil refineries to go away. They just don’t like getting fleeced.
If people can acknowledge that there is a demand for a convenience, short-term loan product, fighting these legislative battles will be a whole lot easier.
Washington state by vote of 84-10 is trying to put a limit on the amount a person can borrow to the lesser of 30% of their monthly income or $700, which ever is less. They also are requiring a mandatory payment plan.
This is better than 36%. I believe borrowers are locked out of the system until they payoff, so loan losses should go down.
Local news 5 broke the story regarding a $2.5M settlement by a payday lender, Pacific Financial Holding dba Fast Cash Loans.
What’s remarkable is that the plantiff’s attoneys got 10,000 people to participate. I don’t know a lot about class action law suits, but each person will probably get $200 and the attorney’s will split up $500k. This does not include the attorney’s fees for the defendants.
I guess the practical advice is don’t leave voicemails, don’t send threatening letters and be nice to people, whether they pay you or not.
Part of the dilema for payday lenders is that if they outsource their collections, they tend to start throwing good money after bad money. This is one way to hedge your loan companies exposure.
A collection agency out of Florida collection agency was sued in Illinois for threatening people. There did not seem to be any suits filed against the lender, in this situation.