From Deseret News archives:
Payday lending problematic
Industry representatives say the free market should prevail because payday lenders are lenders of last resort. Their clients cannot obtain credit elsewhere because of poor or nonexistent credit histories. If these lenders assume the risk of loaning to such people, they should be able to charge sizable interest rates, they contend.
These lenders should be able to make a reasonable profit. But does that mean they should have free rein to exploit desperate and vulnerable people? There is a lot of middle ground between the federally imposed 36 percent interest rate for military borrowers and the median 521 percent interest rates charged by payday lenders in Utah.
Yet, there appears to be little appetite on the part of state and local government to further regulate these businesses. In October, the Salt Lake County Council enacted a six-month ban on new check-cashing businesses in the unincorporated county. The ban was passed in the hopes that the Legislature would take up the matter statewide. Meanwhile, a move to limit these businesses in Salt Lake City sputtered when the key backer was defeated in the fall elections.
Again, it is one thing to provide a service and quite another to exploit people who use your service because, for them, it's the only game in town. To rationalize that a dearth of complaints about this industry somehow justifies interest rates that can run up to 900 percent in Utah is troubling. Are people who are so down on their luck that they need to patronize payday lenders going to bother to file formal complaints with state agencies?
Financial institutions in other states are effectively squeezing out the competition by playing the payday lending game. One credit union in Kansas is matching the federally imposed 36 percent interest rate. Loans are limited to $500 and no further loans are available until the previous loan is retired. People who do not repay the loan in three months are required to attend credit counseling each time they apply.
This is not only competition, it serves an important consumer education function. Perhaps Utah lending institutions could follow suit.
Recent comments
Payday Lenders are Loansharks. I was once in this trap myself....
Lola | Feb. 1, 2008 at 10:07 a.m.
"I've Seen it" Those people you call loan sharks are Title Lenders,...
I've Seen It-Response | Jan. 31, 2008 at 11:42 p.m.
When I got divorced, I decided to give my ex-wife my beloved truck,...
I've Seen It | Jan. 31, 2008 at 6:38 p.m.
- High school football: All-region teams 6:35 p.m.
- Aunt shouldn't enable drug habit 6:30 p.m.
- Dr. explains Mitchell review change 6:12 p.m.
- Stephanopoulos moves to GMA 6:09 p.m.
- DVDs include 'Stanwyck' and 'Ted' 6:07 p.m.
- Cool or hot, souls share same core 6:04 p.m.
- Christians voice belief in astrology 6:04 p.m.
- Utah churches in the news 6:00 p.m.
- Religion news around the world 5:58 p.m.
- Brubeck's religious music inspires 5:53 p.m.
- Letters: Global warming a lie
276 - TCU to play Boise in Fiesta Bowl
207 - BYU football: Bronco weighs in on Hall
195 - Palin signs books, chats with fans
169 - Utah/BYU rivalry can be more civil
151 - Cougars going back to Vegas
150 - Andersen apologizes for Jordan hoax
143 - Nude bathers cited for lewdness
135 - Max Hall wants to look ahead
130 - Jazz fall apart late at L.A.
110
Can you tell I just got out of a budget meeting with Gov Gary Herbert?
For the latest news in the health care debate and how it affects you...
Gravity is a lie perpetrated by scientist seeking grants to study the nature...
He is taking time off so he does not have to get booed and questioned about...
They were not breaking federal law. There is a sign at the base of the trail...
While a fitting tribute, the royal blue is ugly. Stick to the current colors.
Since when did the NCAA establish 1950 as the year to start counting records?...
I'm not sure this guy is really being straight with the voters. The same day...
"The Senate has put together a bill called H.R. 45, They have tried to do it...
to our generation after we have ignored science in the name of politics.
This is a pathetic last wind to the opposition of science in politics. At...
It was cool to see them wear the royal blue against Utah, but the dark blue...

