Check out this article titled “EAST SIDE STORY: Payday-loan industry a necessity, not an evil.”
I think this statement is very accurate when it comes to the people that attack payday loans.
“Never mind that those who object have never needed a payday loan themselves, and likely have never heard a legitimate complaint about a payday loan from a person who has taken out such a loan.”
Dylan Ratigan of MSNBC proves that he knows nothing about payday lending. Does he even read this stuff before he goes live?
Check out the video on the Huffington Post.
Now that the Federal Government either puts the money directly into a bank account or loads up a credit card, it’s easier to collect on an unemployment payday loan.
People want to take a moral stand on this, but that’s not the point. They’re adults. They can make their own decisions.
Ignacio Rodrigues, a clerk at Van Nuys payday lender Ace Cash Express, said about a quarter of first-time borrowers he sees now use their unemployment checks as proof of income. This looks like a good business development tool, if this is indeed the case.
This made it to the LA Times, in an article titled “Payday lenders giving advances on unemployment checks.”
A staff writer named Vincent Carrol had this to say about payday lending:
“These people have jobs and checking accounts, otherwise they wouldn’t qualify for a payday loan. They’re not mentally incompetent. They make choices involving money all the time.”
You can read his full opinion on payday loans in his opinion titled “Don’t Judge Payday Loans in Haste.”
I commend the Kentucky legislature for shelving a loan they did not feel comfortable with. The bill is almost dead.
On a separate note, these consumer groups will never be happy.
For example,
“The real problem is the cost of the loans,” said Rich Seckel of the Kentucky Legal Justice Center, an advocacy group affiliated with Legal Aid.
First, it was the cycle of debt. Now it’s the cost. Let’s face it. They’re disingenuous. They’re not going to be happy until payday lending is unprofitable.
In an article in Business Week titled, Banks May Use Payday-Style Loans to Replace Lost Overdraft Fees, analyst predict the use of “payday loan” type products to recover the more than $15 billion in lost nsf fees.
“Legislation pending in Congress would exceed the Fed’s rules, limiting banks to one overdraft fee a month or six a year. Banks collected about $38 billion in overdraft fees last year, said Michael Flores, a management consultant whose clients include Citigroup Inc. and Wachovia Corp. He said the loss of revenue from the rules may be from $10 billion to $15 billion a year.”
This is pretty big news.
A little off topic, but interesting none the less. Some of the changes include:
“Card companies must now tell customers how long it would take to pay off the balance if they only make the minimum monthly payment. Customers can only exceed their credit limit if they agree ahead of time to pay a penalty fee. And unless a cardholder misses payments for more than 60 days, interest-rate increases will affect only new purchases, not existing balances.”
You can read more in the Wall Street Journal.
On June 30th, without a new law, the payday loan industry in Arizona could disappear.
Industry lobbyist Lee Miller acknowledged that the industry’s critics have the leverage of the June 30 sunset: The industry dies with no reauthorization.
Read more in NAZ Today.
The Associated Press ran an article titled “Payday Loans: How they rate against alternatives”
These figures are provided by the CFSA, but I’m glad that our side is getting some press.
Fee — Loan Type — Annual Percentage Rate
$15 — Payday loan — 391 percent
$29 — Overdraft fee on checking account — 755 percent
$37 — Credit card late fee — 965 percent
$56 — Bounced check fee — 1,449 percent
“We’re not seeking to close the doors of a business here,” Jerstad said. “I am all in favor of small businesses. But we’re seeking to put a cap on this, and 72 percent is really a generous cap, I think.”
Can I give Mr. Jerstad some advice? Don’t think, you’ll hurt yourself. 72% is $8.28 on a $300 loan.
You can read more in the Argus Leader.