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Utah gets failing grade for loan protections
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Classic Socialism | 12:51 a.m. Aug. 28, 2008
Here is what I love about these non-profits, this Peterson woman, and this
Hilton guy: They all can beat up on these lenders, but if they are correct, why
don't they lend their own money to complete strangers at 18 or 36% annual
interest for two weeks at a time?
It seems that they should be able to be the lowest price in town and out compete the guys they complaint about full time.
These consumer groups don't want these guys to go away, they need them around to complain about so they can continue to take taxpayer money in the form of grants to fund their pet projects and justify the existence of their sorry groups.
It seems that they should be able to be the lowest price in town and out compete the guys they complaint about full time.
These consumer groups don't want these guys to go away, they need them around to complain about so they can continue to take taxpayer money in the form of grants to fund their pet projects and justify the existence of their sorry groups.
rip off | 6:15 a.m. Aug. 28, 2008
Call it what it is: a rip off of people in need. My state has really slapped
it down, and one of our good little local banks has been caught supporting the
business as a side business, in Florida of all places.
It is a rip off of those who are desperate. It is not a life preserver, it is a chunk of rock disguised as a "friend."
Something really unMormona about the business, eh.
It is a rip off of those who are desperate. It is not a life preserver, it is a chunk of rock disguised as a "friend."
Something really unMormona about the business, eh.
Comments continue below
liberal Larry | 6:25 a.m. Aug. 28, 2008
In response to the negative press the bottom feeding "payday lenders"
have been getting in the DNews, it looks like they have an organized counter
offensive, Now when ever an article appears pointing out the exploitive nature
of these loans, we get a barrage of bogus "citizen responses" pointing
out abusive bank fees. Nice work guys.
Bob G | 6:26 a.m. Aug. 28, 2008
Utah is notorious for no consumer protection laws. To much blame is placed on
consumers for not reading all the extra fine print in contracts, if you have the
opportunity to see one and read it before signing. Utah does not require that
any credit or lending have a contract to read before signing. By merely applying
for a loan or credit, an unread contract is established with no signatures. An
application for credit or loan should not be used as both, a contract and an
application. A lender can deny viewing a contract and Utah law makes assumption
they are readily available. Now these loan sharks (payday lenders) work on the
same principal. The high penalties and fees can be accumulated on a daily basis
and turn that $10 cost to a $1000 in less than a month. This is predatory
lending no matter how you justify using these loan sharks. This guy borrowing a
$100 dollars to avoid an overdraft penalty is the one living in a dream world
thinking he can beat the system. He better look out when he misses his first
repayment to them by one day. Now lets see who has the last laugh.
Anonymous | 6:52 a.m. Aug. 28, 2008
You quoted the commercial perfectly.
These places are a rip off. Read the article people. All they want is a CAP of interest they are allowed to charge...regulate it. Not to get rid of them all together. These places are a blight and tacky from the road anyway. Close them all down.
These places are a rip off. Read the article people. All they want is a CAP of interest they are allowed to charge...regulate it. Not to get rid of them all together. These places are a blight and tacky from the road anyway. Close them all down.
What? | 7:02 a.m. Aug. 28, 2008
Why would the director(Linda Hilton)of the Coalition of Religious Communites be
qualified to tell payday lenders what to charge on a loan? Where did she come up
the 100% APR? She has no idea what it takes to run a successful business.
Education | 7:11 a.m. Aug. 28, 2008
Does any one understand what these companies charge? When I borrow from a payday
lender my loan is only for a week not a full year. I agree the APR appears to be
high, but my loan is paid off in one week. The loans never go out a full year.
In fact, if I'm in a bind and I am unable to pay off my loan in a week, I
have the option to get a no interest payment plan. How many banks or credit card
companies offer that? The reason I choose to take out loans with a payday lender
is it is cheaper than bouncing checks.
Bogus bank fees??? | 7:12 a.m. Aug. 28, 2008
It is rediculous to call a bounced check fee a bogus bank fee. If you
can't balance your checkbook and keep enough money in your account to cover
your expenses it is your own fault and you deserve the bank fee. By bouncing a
check you are creating more work for the bank. You must do this often if you
are upset about it and may need to consider a cash only system to manage your
money. These payday loans are rip offs and there need to be laws to regulate
them.
APR | 7:21 a.m. Aug. 28, 2008
APR stands for Annual Percentage Rate for those of you who are unsure. An Annual
Percentage Rate is a dollar amount that a business can make by lending money
over an entire year.
The Department of Financial Institutions (DFI) is a regulatory body responsible for ensuring that the payday loan industry is following the many state regulations in place to ensure the consumer is protected and aware of their borrowing options. One of the state laws limits the interest charged by a payday lender at 12 weeks. A consumer will never pay more than 12 weeks of interest on a short-term payday loan, so the APR would never be met.
Why does Linda Hilton believe that a 100% APR would be beneficial? Is she a business owner providing a needed service? Where did this number come from... out of thin air? These payday loan adversaries need to keep the regulation up to the DFI, the business decisions up to the business owners, and the right to make personal financial decisions up to the consumer!
The Department of Financial Institutions (DFI) is a regulatory body responsible for ensuring that the payday loan industry is following the many state regulations in place to ensure the consumer is protected and aware of their borrowing options. One of the state laws limits the interest charged by a payday lender at 12 weeks. A consumer will never pay more than 12 weeks of interest on a short-term payday loan, so the APR would never be met.
Why does Linda Hilton believe that a 100% APR would be beneficial? Is she a business owner providing a needed service? Where did this number come from... out of thin air? These payday loan adversaries need to keep the regulation up to the DFI, the business decisions up to the business owners, and the right to make personal financial decisions up to the consumer!
Come on | 7:22 a.m. Aug. 28, 2008
Why are we wasting time trying to regulate payday lenders? Obviously consumers
choose to go there because they provide a needed service. More restrictions
would only limit choices for consumers. Let the consumer decide if these lenders
should stay in business. Shouldn't people have the right and freedom to
choose for themselves?
"Bogus Citizen" | 7:24 a.m. Aug. 28, 2008
This report is ridiculous. Capping fees is short sighted and demonstrates a
complete lack of understanding on how the economy works. What is the ultimate
goal? Reduce the number of lenders? Push the market underground? How does that
help?
The entire concept of consumer protection is amusing. Let the market work - its better then the alternative.
The entire concept of consumer protection is amusing. Let the market work - its better then the alternative.
Pat | 7:46 a.m. Aug. 28, 2008
It is noone`s "obligation" to loan ANYone money. It is noone`s actual
"responsibility" to assist ANYone out of a hard time. When some among
us come upon "hard times" or have unexpected emegencies it actually is
up to the best instincts within us to help those in need or to have seen to it
that programs get established within our communities to assist legitimate need
(NOT those who have pushed family aside, turned their backs on the faith
community, squandered their money, etc). There is an obligation in life to do
all we can to be careful about our spending, honor relationships, etc. If we
"need" after fulfilling our obligations, there ARE places and people
who will help. Problem IS... some want to live however they wish, expect someone
"out there" to help them and dictate the terms......bologna!
What side is Paul Allred on? | 7:56 a.m. Aug. 28, 2008
He defended the institutions he is supposed to be investingating. Which side of
the law is he on?
They dont see it as profitable | 8:02 a.m. Aug. 28, 2008
In states where these organizations are regulated, they go away.
Here in Utah, they have been protected, and have thrived in our downturned economy.
They like it here and will fight tooth and nail to stay here. They get huge influxes of cash from hurting our people and economy.
Regulate them, and they have to compete with regulated banks, and they go away. They don't exist where there is regulation.
It is sad to see the Allred guy who is in charg of investingating these organizations defending them. I have heard him speak before, and he has openly stated that there needs to be high levels of regulations of these organizations. He statate all the problems that he has run into dealing with them as unregulated organizations.
As far as not regulating them because of a free market economy, that is bunk. There needs to be boundaries for any economy to thrive. That is the problem with these companies. They hurt the economy and create bankruptcies and other problems.
Regulation is the answer. Create boundaries for them, and they will go away.
Here in Utah, they have been protected, and have thrived in our downturned economy.
They like it here and will fight tooth and nail to stay here. They get huge influxes of cash from hurting our people and economy.
Regulate them, and they have to compete with regulated banks, and they go away. They don't exist where there is regulation.
It is sad to see the Allred guy who is in charg of investingating these organizations defending them. I have heard him speak before, and he has openly stated that there needs to be high levels of regulations of these organizations. He statate all the problems that he has run into dealing with them as unregulated organizations.
As far as not regulating them because of a free market economy, that is bunk. There needs to be boundaries for any economy to thrive. That is the problem with these companies. They hurt the economy and create bankruptcies and other problems.
Regulation is the answer. Create boundaries for them, and they will go away.
Ripped off | 8:30 a.m. Aug. 28, 2008
As long as we have politicians involved in it as owners and or recepients of
campaign donations, nothing will change. One of their greatest supporters is the
state attorney general, so how are Utahns going to get any relief from the Tony
Sopranos in our mist.
Ken Goddard | 8:40 a.m. Aug. 28, 2008
Utah regulates everything else, why not this area. These loans to the naive and
weak cause a lot of strife in society. True old fashioned pawn shops charge 120%
interest. That is all that is needed for quick cash.
KJB | 8:49 a.m. Aug. 28, 2008
So preying upon the poor and desperate is OK in Utah, if you want to marry your
same-sex partner, you're destroying civilization?
Enough Already | 9:07 a.m. Aug. 28, 2008
Another article bashing Payday Lending. It's getting old now. Funny how
markets work. Where there is demand then suppliers come in. If people
didn't want short term loan, then suppliers wouldn't offer them and
get into another line of business. But there IS a market for 500% loans.
People are not all stupid. It's not hard to figure out that if I borrower
$100 I have to pay the company lending me money a dang good rate since I have
sucky credit, no cash, and a low income job. It's better than getting
kicked out of the apartment I rent for late payment.
Basically this is just supply and demand. If all you liberal nut jobs are so outraged then go start Payday loan companies that charge 36% or 100% and we'll see how long you're in business. Do you know the deliquency rate on these things??? They have to charge a lot of interest to cover their losses and make a profit.
Demand = Supply
Basically this is just supply and demand. If all you liberal nut jobs are so outraged then go start Payday loan companies that charge 36% or 100% and we'll see how long you're in business. Do you know the deliquency rate on these things??? They have to charge a lot of interest to cover their losses and make a profit.
Demand = Supply
It's regulated | 9:11 a.m. Aug. 28, 2008
Payday lending in Utah is regulated. There are very few complaints from the
people who actually use it. What's the problem?
Not only that but the interest charged is capped at 10 or 12 weeks (Yep, that's part of the regulation in Utah that is ignored when reported and when out of state institutions give Utah a low grade)
The user of the service doesn't have to pay more than 10 or 12 weeks of interest. I don't understand how opponents can point to an Annual Percentage Rate when the loan becomes interest free after 10 or 12 weeks.
In reality the APR is about 1/4th of what is reported if the user enters into an interest free repayment plan after 10 or 12 weeks and keeps the loan for a year.
Not only that but the interest charged is capped at 10 or 12 weeks (Yep, that's part of the regulation in Utah that is ignored when reported and when out of state institutions give Utah a low grade)
The user of the service doesn't have to pay more than 10 or 12 weeks of interest. I don't understand how opponents can point to an Annual Percentage Rate when the loan becomes interest free after 10 or 12 weeks.
In reality the APR is about 1/4th of what is reported if the user enters into an interest free repayment plan after 10 or 12 weeks and keeps the loan for a year.
Chance Williams | 9:20 a.m. Aug. 28, 2008
I condemn any business that profits from robbing the disabled.
"the typical user spends $793 to pay off a $325 loan."
This is the part where Utah legislators allow these "sharks" to rob from the poor and ignorant. None of us would borrow at 521%, but the mentally handicapped will, and the fact that we don't protect them doesn't reflect well on us.
"the typical user spends $793 to pay off a $325 loan."
This is the part where Utah legislators allow these "sharks" to rob from the poor and ignorant. None of us would borrow at 521%, but the mentally handicapped will, and the fact that we don't protect them doesn't reflect well on us.
Where's my choice? | 9:24 a.m. Aug. 28, 2008
I probably will never need a payday loan, but if I did need one, I should be
able to get one. I'm sick of everyone trying to create a Nanny state to
dictate what I should pay in fees and interest and what food I can eat, what my
fuel milege should be, and how many squares of toliet paper I should use.
If the payday loan companies are overcharging interest then there is an opportunity for someone out there to undercut the on price, service, & etc. and force them out of business, right?
Competition and the free markets really work.
If the payday loan companies are overcharging interest then there is an opportunity for someone out there to undercut the on price, service, & etc. and force them out of business, right?
Competition and the free markets really work.
choice | 9:47 a.m. Aug. 28, 2008
Pawn shops charge less because you have to leave your lawn mower or something of
value, for the 2 times I took out a payday loan last year it saved me money.
Educated Man | 10:05 a.m. Aug. 28, 2008
In order for Utah to see what would happen if we banned payday lending in the
state, all we have to do is look at history. In May of 2004 and in December of
2005, Georgia and North Carolina respectively banned the industry as a whole.
The Federal Reserve Bank of New York conducted a study into the effects the ban has had on the two state's economies. Their results were quite astounding. According to the study, since the ban on payday lenders, there have been more bounced check fees, more complaints about lending practices, and more chapter 7 bankruptcies filed within the two states than ever before.
Their conclusion is clear. Regulate the industry and you're going to see more bankruptcies across the state of Utah. Seems counter intuitive doesn't it? Really, it's very simple. People need short-term credit options. That's why people like Allred and Shurtleff are backing the industry now. They got themselves educated on the subject. I recommend that everyone else do the same.
The Federal Reserve Bank of New York conducted a study into the effects the ban has had on the two state's economies. Their results were quite astounding. According to the study, since the ban on payday lenders, there have been more bounced check fees, more complaints about lending practices, and more chapter 7 bankruptcies filed within the two states than ever before.
Their conclusion is clear. Regulate the industry and you're going to see more bankruptcies across the state of Utah. Seems counter intuitive doesn't it? Really, it's very simple. People need short-term credit options. That's why people like Allred and Shurtleff are backing the industry now. They got themselves educated on the subject. I recommend that everyone else do the same.
An economist | 10:17 a.m. Aug. 28, 2008
To Enough Already | 9:07 a.m.:
Your espousal of economic theory is meaningless, because the customers of these lenders really don't understand the terms. Probably only one-third of Americans actually understand interest, and they're generally not the kind of people who would borrow from these guys.
Our economic theories about competition, supply, and demand are based on an assumption that often isn't true in real life: that the buyer and seller have so-called "perfect information" about the transaction. When the information flow breaks down, the theory does too.
Information asymmetry is how a whole lot of money gets made in the financial industry. That's OK when the information is honestly not available (speculating on the future value of stocks, etc.). But I don't think it's OK when dealing with the poor and uneducated.
Your espousal of economic theory is meaningless, because the customers of these lenders really don't understand the terms. Probably only one-third of Americans actually understand interest, and they're generally not the kind of people who would borrow from these guys.
Our economic theories about competition, supply, and demand are based on an assumption that often isn't true in real life: that the buyer and seller have so-called "perfect information" about the transaction. When the information flow breaks down, the theory does too.
Information asymmetry is how a whole lot of money gets made in the financial industry. That's OK when the information is honestly not available (speculating on the future value of stocks, etc.). But I don't think it's OK when dealing with the poor and uneducated.
Re; Chance Williams | 10:17 a.m. Aug. 28, 2008
That line that the typical user spends $792 to pay off a $325 loan is a lie
pushed by these leftist consumer advocate groups.
Here's the fact: If the average loan is $325.00 and the average loan goes two weeks, then the fee for that is $64.00 not $792.00
Here's the fact: If the average loan is $325.00 and the average loan goes two weeks, then the fee for that is $64.00 not $792.00
Anonymous | 10:18 a.m. Aug. 28, 2008
Go Chance! You should get elected to public office, don't you think? :-)
Richard Drake | 11:31 a.m. Aug. 28, 2008
The State of Utah's Dept. of Consumer Affairs and so-called protection is a
big joke. Predatory lending or absolute rip-offs by so-called quality
transmission services, and others is a joke. If I were the governor of the State
or a legislator I would ensure that business does not become "God" as
they wrestle with the important functions of protecting consumers (educated or
not).
I have witnessed many good people trying to climb out of the well with a rope that breaks before they ever reach the top.
The wolves, dressed in sheep's clothing must be eliminated. Where is the courage to do so? Shame on our so-called "leader" who sit back and watch these predators consume their prey.
I have witnessed many good people trying to climb out of the well with a rope that breaks before they ever reach the top.
The wolves, dressed in sheep's clothing must be eliminated. Where is the courage to do so? Shame on our so-called "leader" who sit back and watch these predators consume their prey.
Re: Richard Drake | 12:02 p.m. Aug. 28, 2008
Nice big government stump speech Richard. By the way, the Utah Department of
Financial Institutions, not the Utah Department of Consumer Affairs regulates
consumer lending in Utah.
Maybe that's why the Department of Consumer Affairs doesn't offer "so-called protection" in consumer lending.
Maybe that's why the Department of Consumer Affairs doesn't offer "so-called protection" in consumer lending.
The new God | 12:05 p.m. Aug. 28, 2008
The almighty dollar has replaced God in Utah.
Seems that others | 12:22 p.m. Aug. 28, 2008
can see the light
Wake up Utah
Dead beats running the Government
Wake up Utah
Dead beats running the Government
James | 1:52 p.m. Aug. 28, 2008
Do to the low wages in utah, and the fact I don't have a college education
I use these places all the time. They are a life saver!! Me and my family need
services like this so that we can survive. Its funny that the people who
don't use them are bashing on them.
Scotty52 | 6:49 p.m. Aug. 28, 2008
Of course "buyer beware" should prevail, but consider the very
business model of payday lenders. Loan money to those who really have no means
of re-paying it. If they could, they would not need the loan in the first
place. The lender knows that the customer will "re-loan" every two
weeks. You want proof? Hang out at a payday loan center and see how many people
rollover their loans. It is astounding. I would say the majority of loans
don't get paid off after the first few cycles. It goes on for months, even
years. Chances are, those same customers have loans out at several lenders at
any one time. These people spend hours each payday going from lender to lender
re-loaning.
The lenders know they can entrap people into a cycle of debt.
If we say it is OK to enter into a payday loan as long as the risks are known, why is it not OK to allow people to try Meth or Cocain as long as they know the risks going into it?
The lenders know they can entrap people into a cycle of debt.
If we say it is OK to enter into a payday loan as long as the risks are known, why is it not OK to allow people to try Meth or Cocain as long as they know the risks going into it?
halie | 7:10 p.m. Aug. 28, 2008
i am doing this on a current event for my history class, it is just awful what
is happening, why can't this country get anything right
Kermit | 8:09 p.m. Aug. 28, 2008
Payday loans so I can make rent are a godsend. Gotta have that iPhone and
platinum satellite package, don't ya know.
Uneducated Economist | 10:55 p.m. Aug. 28, 2008
A response to book worm at 10:17 AM. Two independent studies about the habits
of payday loan customers reveal that over 90% CLEARLY understand the fees and
terms associated with these loans. The terms are clear and simple. No hidden
fees like credit cards, all fees are clearly disclosed & on the table at the
time the loan is issued.
The pompous attitude that people who use these loans are uneducated (i.e. stupid) is patently false. What some may lack in formal education (half of payday customers have two years of college education) they make up for in street smarts and common sense. They understand that payday loans can be cheaper than the alternative of late rent, returned check fees, and utility disconnections.
Ironically, one can see from your comment that your lack of understanding and plain ignorance about payday loans reveals how little that economics degree has helped.
The pompous attitude that people who use these loans are uneducated (i.e. stupid) is patently false. What some may lack in formal education (half of payday customers have two years of college education) they make up for in street smarts and common sense. They understand that payday loans can be cheaper than the alternative of late rent, returned check fees, and utility disconnections.
Ironically, one can see from your comment that your lack of understanding and plain ignorance about payday loans reveals how little that economics degree has helped.
Townee | 5:14 p.m. Sept. 3, 2008
Wow! I may move to Utah. I�ve never heard common sense
like that from a Dept. of Financial Institutions Official. Thanks to Mr.
Jamarillo standing up for personal responsibility and for having confidence in
the people of Utah.
Wag the Dog | 4:24 p.m. Sept. 6, 2008
That is ridiculous that a simple rate cap on loans with a small market share is
going to save the world. Rate caps are designed to smother these lenders because
the state can't seem to ban them outright. In this modern economy, all
citizens deserve access to some form of credit. Capping rates may sound like a
great idea, but it is actually depriving some people of that access to credit by
driving out their lenders.
Hello! | 5:17 p.m. Oct. 21, 2008
If the Payday Lenders are taking advantage of people and lending to those with
no chance to pay the loans back, wouldn't this put them out of business?
They can't possibly lend irresponsibly and remain in business. It is silly
to even suggest as much.
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Where's the outrage and "report card" on bounced check fees?