Deseret News | Lawsuits by payday lenders swamp courts

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Lawsuits by payday lenders swamp courts

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MoJules | 12:06 a.m. Feb. 4, 2008

PAYDAY LOANS = CREDIT CARD = FOOLISH SPENDERS!!! OK, here is the problem, there is a target group, I would say about 20-30 years old, who are wanting it all, and they get a credit card, if that isn't possible, because they have messed up their credit, they get pay day loans. Payday loan companies and credit card companies are preying on these kids that are so desperate. These companies know that most of these people will not pay back and then they stick them even deeper in the pockets. I have a friend who has three of his five children, maybe a 4th, that have declared bankruptcy this last year. So who gets burned on this, not the credit card companies or the retailers, we tax payers get to pay the price for stupid and irresponsible spending. My daughter probably spent over $1000.00 in interest in pay day loans, they would have to borrow another one to pay off the next. They paid all of it off and endured a couple of years of struggling, finally they are secure, but they did honor that dept, thanks be to all that do.

why is gambling illegal | 5:09 a.m. Feb. 4, 2008

when this isn't ..because the payoff is so much better...wonder if there are any church members running these businesses?

Anonymous | 6:58 a.m. Feb. 4, 2008

Everyone has their freedom to choose. However, this industry, which should be eliminated through lawful, legislative means, has a set of problems on their hands that won't go away immediately.

Any lawful business should require resonable payback with interest. Such a cost of 500% is predatory, should be illegal, and most of, defies common sense.

The credit card industry has a problem as well. Unreasonable interest rates, some of those rates considered predatory as well, ruin a person, his or her life, family reputation,etc.

Comments continue below

David Johnson | 7:50 a.m. Feb. 4, 2008

Other states with less "christians" have banned payday lenders. The federal government set a 36% interest cap for service members nationwide, why not adopt the federal standard?

Odd that Utah sets a standard lower than the Federal Government and lower than lees "christian" folks.

Anonymous | 2:16 p.m. Feb. 4, 2008

you can usually get a better deal with these like at cashloancity.com

Breaking it down | 3:44 p.m. Feb. 4, 2008

By the numbers, 27,000 lawsuits in 3 years means an average of 9,000 lawsuits a year. With 455 stores in Utah, 9,000 lawsuits a year means, on average, about 19 lawsuits per store per year, or a little more than 1.5 lawsuits per store, per month. Again, with 455 stores, each store would only have to make about 2,197 loans a year or 183 per month, or about 6 loans per day to make payday a 1 million loan industry annually. That would mean that the industry estimates of 1 million loans is reasonable. Thus, by the numbers, with more than 1 million loans made annually, I don't feel that 9,000 collection lawsuits sounds that outrageous, I mean, it's less than 1%. I think the crime here is the sensationalism and the unprofessionalism of people like Mr. Peterson, who mocks those who go through the judicial process to collect on a consensual financial transaction. Mr. Peterson, you are free to give away your own money and to forgive any debt, but please don't force lenders to join your socialistic faith.

Fee Based Industry | 4:08 p.m. Feb. 4, 2008

It's easy to campaign against triple digit APRs. I mean who can justfy a 300 percent APR loan in a day when home mortgages go for about 6% APR. Everyone assumes that the difference between the 300% and the 6% is simply profit and profit in the extreme. The fact is that a 6% 30 year obligation on a $300,000 loan will earn more than $500,000 in interest. The length and amount of the loan make it a profitable transaction for the lender. With a $300 payday loan, the $15-$20 that must be earned to make it a "profitable" transaction, must be earned in a 2 week period of time. By definition, in order to capture that amount on a small loan in a short period of time, that small charge or "fee" carries a triple digit APR. It's a taxi cab like fare--I mean who would pay $3 a mile for a Hertz rental car? No one would. It's the same with payday loans. They are highly regulated (12 week interest cap) very short term fee based loans, made to fit into a federal disclosure system requiring posting as an APR. Square peg, round hole?

Be Responsible | 12:17 p.m. Feb. 5, 2008

I love the comments.. People who really know nothing of the business trying to spout off garbage like they are in the know.. Bottom line is they would not be in business if it did not work. If people did not pay them back, how would they make money and keep growing. There are responsible people out there who pay their bills and sometimes a cash advance is much cheaper than bouncing 5 checks. And please dont blame the companies for your misfortune.. They did not force you to come in and borrow money. You did that yourself, and if you had to file bky, you probably would have filed with or without your payday loans.

I have never used a payday lender, but I know many who have. It has helped them in their time of need, but those who took advantage, got hurt by it. They were using for the wrong reason. Those same people, if they had access to a credit card, would have racked up $10,000 plus of debt and still filed bky to get out of it. This is the paper and written by a guy who has an agenda. Get your facts straight.

Richard G. | 7:39 p.m. Feb. 5, 2008

Payday loan companies are exploitive bottom-feeders and ought to be made illegal.

promises | 9:01 a.m. Feb. 6, 2008

Why no outrage over the lawsuits against people who don't pay back student loans or medical bills?
A promise to pay is a promise to pay.

I have it on good word that many state legislators are owners of payday loan companies. Hence, no usury laws . . .

MAEL | 10:23 a.m. Feb. 7, 2008

I find it interesting that one of the justifications for the high fees is that these are high risk loans which merit a high interest rate. Yet the industry spokesperson said that they have a 99% repayment rate. If their repayment rate is so high it would indicate that these are not high risk loans, which takes away one of the justifications for the outrageous fees.

Jason | 12:49 p.m. Feb. 7, 2008

I have worked with payday lenders across the state serving the majority of these papers. Everyone wants to cry foul on the payday lender. Nobody wants to talk about the $450,000 dollars Check City pays the court in fees. All this to pay 3 clerks and volunteer attorneys. I think that pay day lenders are supporting the legal system more than bringing it down. They are not High risk lenders they are the only source for getting a small loan in order to get out of a snag. In order to do this there is liabilities and expenses that need to be taken care of. If you bounce a 3 dollar check the bank will charge you $20.00. Anyone want to calculate the intrest on that? At least the payday lenders are giving you an option. We need to stop treating society as a bunch of babies. THese are grown adults making a decision to borrow money and they understand what they are getting into. And we shouldnt protect them from the results of not paying. Maybe Nevada Bob needs to find out what intrest rate the casino's are charging the poor to pull a levor.

Allen | 1:03 p.m. Feb. 7, 2008

Isn't Utah known for being a strong republican values state? Since when has the responsibility of decision making been passed from the individual and family to the government? Why are we screaming for more government regulation? Just because it's a "feel good" issue. Sure helping the presumed poor and down trodden sounds good but is taking away a choice how to best help them? Sometimes we facus on the micro managing and forget the big picture. Parents and families need to teach thier kids about money, they need to educate and assist thier families in understanding finances. The responsibily and the solution should not be government but families, neighborhoods, communities, and groups working to assist eachother.
Having worked in banking I know I wouldn't have written a two week or even two month loan that was under $400 at a reasonable rate with no underwritting fees or some way to make back the money it takes to pay for a credit report, personel to process that paperwork, data bases to track the loan and payments, collections to pay for the loans that do go bad, everything associated with writing a loan, they have to make money!!

Grant | 12:58 p.m. March 1, 2008

Payday loans help. There are a few borrowers who cannot figure out how to borrow responsibly, but we need to hold them accountable for their own actions and stop blaming the lenders for the borrower's mistakes. It is not too hard, you do not borrow what you cannot pay back. People are using payday loans like credit cards, but it is not a revolving credit line, and they are screwing themselves. What we need to do is educate these people on how to better manage their money and stop putting restrictions on payday lenders. Most of us can use payday loans to our advantage, it just takes a little thought.

speaking my mind | 12:35 a.m. March 6, 2008

I am a very educated person who have used payday loans in the pass and no one held a gun to my head. i have also gone from one place to the next place and got loans and yes i did et myself in trouble BUT I got myself out of it and didn't bk out. and it is not just the poor and uneducated taken these loans out there is people that are making good money takin them out. they can only charge 12 weeks of interest. and i know that checkcity will work will more than any other payday loan place does as long you are making payments. i think this article is very one sided and i this Mr. Davidson has dislike to some in this business why we spending so much time on this subject when we need to worry who will be the next prisdent. i am sure that the people out there that are taking these loans out and not paying them back neve plan to if I borrow money to someone and they didn't pay me back I would sue them 2 the people the are makin comments need to educate themself better

geoffhiker | 7:01 a.m. April 3, 2008

I heard a rumor that most of the Utah Legislators are Mormon. In reality, they have found it convenient to use faith for a legitimate front. If California can recall Gray Davis, then we should have an Omnibus Recall Election and vote the Utah Legislators out!

Educated? Maybe not... | 11:07 a.m. May 6, 2008

For "speaking my mind": Education shows in the way you portray your words and the spelling of them. Your post only proves the point of the article. Uneducated and those bordering poverty are the victims of their greed. $20 on a $100 loan is 20% in just 2 weeks. Multipy that by 26 (half of 52 weeks in a year) and it becomes 520% interest. It is also a $520 increase from a $100 investment. My issue is who is paying this money? The rich or the poor? These guys are not Robin Hood.

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