Deseret News | Reader comments: Payday lenders tells military 'no'

Reader comments
Payday lenders tells military 'no'

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mdub | 12:24 a.m. Oct. 2, 2007

Boy...you can't make a profit on 36%??? I'm sorry, but any lending industry that can't operate on such terms, shouldn't exist. Why can't we legislate this business out of existence??? Just because it's an easy option for people to do, doesn't make it right or good to even have available. Maybe they should do debt counseling instead. Oh wait, they only know how to keep people in a cycle of debt. Not get out of it!!!

LNDR | 4:40 a.m. Oct. 2, 2007

Spread the restrictions. 36% APR for a bounced check. Pennies for the bank. Same with ATM fees. OOPS, there go checking accounts, businesses that accept checks, ATM's. What?! They charge fees not an APR?! Take off your blinders and realize short term loans charge fees like banks and ATM's and are VASTLY cheaper if they prevent even one bounced check.
McDonough School of Business at Georgetown University found: Payday advance fees are lower than many of consumersï¿½ alternatives. Bank NSF and merchant fees on bounced checks typically cost more than three times the cost of a $100 payday advance.
Payday advance APRs are often lower than customersï¿½ alternatives, even on the same two-week term For example, on a 30-day term, a standard $29 late fee on a $100 credit card payment would have an APR of 771 percent. Similarly, a $100 check with a $25 NSF and a $25 merchant fee would have an APR of 1,303 percent. The study is Payday Advance in America: An Analysis of Customer Demand. Wall Street Journal found similar results, so the the Federal Reserve Bank of New York. Get empirical data, don't rely on anecdotal evidence fed to you by others.

Bob G | 4:51 a.m. Oct. 2, 2007

Isn't loan sharking illegal? Just because they have a business license to lend money doesn'e excuse them from loan sharking laws. All these loan sharks should be put out of business because that is all they are. They prey on the poor and low income people that can't afford them anyway and would use a bank if they were able to. The collections department must be just as bad as the office and business owners and use threats on their lives to collect. Why hasn't something been done to investigate these businesses and make them abide by financeing and lending laws?

Comments continue below

Crazy | 6:19 a.m. Oct. 2, 2007

These guys are a terrible part of our society. Payday Loans should be put out of business. They entice the young and uneducated who don't understand the issue with compound interest. I don't feel bad for them at all and think it will help the young men and women of the Military. I am grateful for this law.

dgj | 7:08 a.m. Oct. 2, 2007

As a military reservist, I agree that the loss of access to these predatory pay-day loans is a good thing. My concern is that traditional lenders may use the same excuse these guys do that they can't make money when their loans are federally capped at 6% APR during deployments and will stop lending to military reservists. This may lead to difficulties in getting home mortagages, auto loans, or credit cards for these military reservists.

Yeah, you get it | 7:09 a.m. Oct. 2, 2007

Utah law only allows interest to be chsrged for 12 weeks, even though it must be reported as an APR. Things aren't always what they seem.

Dave | 7:36 a.m. Oct. 2, 2007

The pay-day loan people are pretty reasonable when compared to the IRS abd State Tax Commision. They are the real predators.

Jonathan | 7:42 a.m. Oct. 2, 2007

These things are all over Utah, I have seen more here that in my home state of CA. Something needs to be done about them.

Guaglione | 8:04 a.m. Oct. 2, 2007

I'm not in any way saying that these places are good for society, but they wouldn't be in business if there wasn't a market for them. Obviously they're the best option for a lot of people. Maybe instead of trying to shut them down we just make sure that people using the service understand exactly what it is they're getting.

Much like McDonald's; let them serve their burgers the way the people want them, but make sure the public has access to information letting them know the possible detrimental health effects of their choice.

If people want a product or service, who are we to tell them they shouldn't have it? Let's just make sure that they know what they're getting into.

Gary | 8:11 a.m. Oct. 2, 2007

A number of years ago I managed a financial institution where we were charging 36 % per year. The law provided that that rate, even though it was far to high, that the law was set to take care of loaning money to high risk individuals. To know that these financial institutions in question are charging up to 500+% is really sick. And to now say that they are not willing to loan to servicemen for 36%, because they will lose money----------that is fully dishonest. They make far too much money at 36%. I hope that the federal government and our state will start to close out this dishonest form of lending money.

Harry | 8:43 a.m. Oct. 2, 2007

I have witnessed victims of these predatory loans. They usually borrow the money at rates up to 600% APR for what they expect to be just 2 to 4 weeks. The loan company then banks on the borrower not paying off the loan in the two to four week period. Then the cash register rings for the loan company as these poor victims are ground into dust by the 600%+ interest rate. My experience shows that the victim does not really understand what they are getting into, or that they are desperately in need of immediate cash. At the very least they do not have the discipline to manage their finances wisely. These folks are definitely preyed upon by these financial institutions. Our service men would be better served by using their military related credit unions like NFCU.

BH | 8:50 a.m. Oct. 2, 2007

Gauglione is right. While I agree that it seems immoral to charge the sort of rates that are being charged, there is no deception involved. These businesses provide exactly the service they promise. The rates are clearly publicized. Everyone knows what the terms and conditions are. We need to let free enterprise regulate the pay day loan business.

If the consumers would stop using these services, they would be forced to lower their rates, or go out of business. But as long as customers walk in the door and sign the dotted line, that is their choice. And as pointed out, these businesses do provide an alternative to other financial penalties.

Bob G: You need to do some homework on what constitutes a loan shark. What seems as outrageous rates, do not in and of themselves constitute being a loan shark.

Payday loan = crack | 8:58 a.m. Oct. 2, 2007

"Oh, it's GOOD business" and it's cheaper than "one bounced check".

People who need a loan "until payday" make a habit of it.....and then, how do they pay off the moneychanger (payday loan shop)? By extending the loan?

It's the financial equivalent of CRACK. Habit-forming, depressing, "might as well go get more I'm in so deep already".

These places ONLY stay in business because people constantly roll over their debts.

It was embarrassing to come home to utah, after months of being out of state, and realize how pervasive these payday loan places are. Embarrassing. It makes us look like we're ALL using them.

Anonymous | 8:59 a.m. Oct. 2, 2007

These effect many many people not just the poor. I know somone that makes about 70,000 a year and still juggles 2 or 3 payday loans these hurt and they are hard to get out of they hold people bondage.

Joe Moe | 9:02 a.m. Oct. 2, 2007

Gary, is it really "sick" that a company would charge $10 when someone borrows $100 for a week? That's a 500% rate. We have to realize that these are meant to be emergency, short-term loans.

I do not really like these lenders, and I've never used one, but I think most of them are legitimate businesses with a legitimate service.

The real root problems are these: 1) an impoverished class making less and less (relative to the cost of living) all the time; 2) a consumerist society where people feel entitled to buy more "things," without responsible budgeting.

cap | 9:21 a.m. Oct. 2, 2007

Bob is right about Banks though. Any Bank with all their fees, like overdraft, bounced checks, Late Fes, etc, ALL CHARGE WAY MORE INTEREST THAN PAYDAY LENDERS. Why do you think the Banks are part of the Lobbying effort to help Payday Lenders stay in business. Banks are just as bad, but Payday Lenders take all the heat. Banks disguise the interest rates they charge by calling it a "fee". But if you do the math, they charge just as much or more interest than Payday Lenders.

Also all you who talk about 36% as high enough, don't realize that these are super risky loans that demand a high return because a lot of them go into default. So to make a profit they have to charge over 36%. If everyone paid their loan back then 36% would be great! But those risky borrowers who need these types of loans default at a high risk.

Troy | 9:36 a.m. Oct. 2, 2007

The U.S.Government should take an even firmer stand against these predatory lenders. Include in the legislation the entire populace and rid our society of this debt-incurring menace. The lawyer quoted in the article states; "Refusing service to the the military does not violate laws because you can't force a business to enter into a transaction that causes it to lose money." So how can the American people be forced unwittingly into the same money losing transactions? WE NEED TO WAKE UP! As tax payers can we continue to pick up the tab for these crazy tansactions through our churches, and families, and charitable organizations? We may never have been enticed personally into one of these snake pits, but each one of us will eventually pay the piper for those few who have made a desperate choice. We've already shouldered this financial burden far too long through home foreclosures, repossessions, welfare abuse, and increased criminal activity, just to name a few.

the heat | 9:38 a.m. Oct. 2, 2007

I see a lawyer feeding frenzy over this military exclusion. If we took better care of our military than they wouldn't need a payday loan. This whole country is built on credit. Just watch, Russia is taking over all the oil supplies, China is getting in on it, all it's going to take is one match, one national disaster and our whole country will go under financially. 80% of the country doesn't have a liquid $1000 available to them.

There is a bigger problem here, I do hate that worm on tv, and the guy that says "got me some cash" like yeah, you're the man, you just "borrowed" some money, how manly of you.

We are pretty well off, but it costs a fortune to feed and clothe our family, and I even hit garage sales. Maybe I should go to Peru and realize that one pair of pants is plenty though. We need to get rid of our social expectations, that you can't wear the same outfit in the same week and garbage like that. I guess in a world where we worship Paris Hilton, what can we expect?

Profit for me, not for thee... | 9:46 a.m. Oct. 2, 2007

I love to see people grouse about "predatory lending" and "price gouging" of payday lenders who make a 36% profit.

Yet I'm sure these same people think nothing of making up to 100% profit on the sale of a house they bought just a few years earlier.

But that's okay, because they're good people. Not like those icky loan sharks.

Fredd | 9:59 a.m. Oct. 2, 2007

22 years in the military and never used a payday loan. If you need payday loans then you need financial education, not access to 500% interest rates. I remember when banks were going to charge to use a teller because they wanted you to use the ATM so they could cut labor costs. Then they saw the gold mine of charging a fee to withdraw your own money. banks are wealthy powerful instituitions. Banks own these payday loan operations. Don't feel to sorry for them.

A K | 10:01 a.m. Oct. 2, 2007

is a sign of our culture sell your mom if have to

Anonymous | 10:07 a.m. Oct. 2, 2007

Hey Cort Walker, you're a great american. While those in the military are fighting to preserve YOUR freedoms you are helping to destroy their chance at the "american dream". The Payday loan business is lousy, and I wish that no one had to use it. But to refuse service to our military personnel is just WRONG. Why don't you jack up the interest rate on everyone else by 5% and then maybe you could "afford" to help out those miltary people who are defending the country that allows you to jack them around. By the way, how much are you really going to lose? It's not like Utah has a huge military presence like they do in some states. Payday lenders should step up and help out our men and women in uniform instead of turning away from them.... oh, but I forgot, we do live in the state that supposedly espouses family values and love for one another. WOW, way to prove that.... All for one and one for only my best interests.

Investment, not Profit | 10:18 a.m. Oct. 2, 2007

What sad post. So now lending someone money at astronomical rates and flipping a house for 100% are on the same level? Hardly. Those who are lending money are doing it to people who are desperate and have no other alternative. Buying a home and selling it for profit is a good investment. You aren't selling it to someone desperate. They are paying market value for the good. 500% APY is not market value. Don't lump the two together.
And for those claiming that bank fees are on the same level as the loan sharks, you are mistaken. I work at a bank. Did you know that it is technically illegal to write a check when you have no funds to cover it? Or to use your debit card when you don't have money in your account? And I know that the bank I work at is willing to work with people on bank fees in desperate situations. Loan sharks don't care. Plus, banks offer overdraft protection accounts that have APY's around 17%. Most people would agree that is a fair rate.

c | 10:33 a.m. Oct. 2, 2007

This subject has so many double-standards to it that it is laughable. Don't give the loans to military to "protect" them? What about protecting everyone else? Lenders refusing to give the military the loans because they "can't make money off of them?" Now that is so sad! Cry me a river. These places should be out of business.

Kyle | 10:50 a.m. Oct. 2, 2007

Hey everyone on this board! Why aren't you stepping up and offering loans at 36% APR? You all make wonderful armchair lenders. Each and everyone of you who think these payday lenders should offer loans at 36% should offer these loans yourselves at or less than this rate. Unless you are willing to lend your own money to these soldiers you are nothing but hypocrites.

Kia | 10:51 a.m. Oct. 2, 2007

Wow! Way to support our military men and women! Wonder what they consider as a good rate for THEIR OWN FREEDOM? Must not be worth 36%.

East Mill Creek | 10:59 a.m. Oct. 2, 2007

I do not think anything will be done to change this situatioin.

Why? I seem to remember that one high Republican official owns one of the biggest payday loan companies in Salt Lake.

Help me out I do not remember his name or position.

james | 11:01 a.m. Oct. 2, 2007

For those defending these payday loans, just talk to a few people who have had to use this "service". The Lender knows that the probability of the borrower paying off the loan within the first 2 weeks is very, very low. They damn well know that these people are in a bind. They lenders know this, but they use the facade to entice these people in to borrowing. They use anactodal and testimonial evidence on their commercials promoting this service. "Oh, how great...I was only charged $4 for this service". How about interviewing the thousands that have been completely screwed over by this. To those that say that these loans are cheaper than overdraft fees and such, that is just if the borrower pays off the loan in full within the 2 weeks.

Jay | 11:14 a.m. Oct. 2, 2007

People ought to be outraged by these loan sharks. It's time for the legislature (State and Federal) to protect all citizens, not just those in the military, and pass meaningful usury laws with a 21% cap on interest rates (still exorbitant and plenty profitable).

Paycheck to Paycheck | 11:37 a.m. Oct. 2, 2007

Payday lenders are taking advantage ot those who cannot even afford to live paycheck to paycheck!

They should be run out of business. We all need to make our opinions known to our political representatives that this needs to change.

Love my CU | 11:46 a.m. Oct. 2, 2007

I applied for and got a $200 overdraft protection on my checking account at my credit union. It didn't cost me anything! The APR is about 10% and I never have a bounced check fee and if I'm a little short one month, I have $200 to use without any loan approval or extra fees. On average most payday loans are about $200. Wise up, people -- look for and use better sources that are out there and we won't need to legislate paydays out of existence -- they'll dry up on their own!

realist | 11:54 a.m. Oct. 2, 2007

wow! there are alot of nieve people out there

Hey, CU Lover | 12:05 p.m. Oct. 2, 2007

Usually even high risk people can get a $200 overdraft protection from their credit union. And they don't have to pay it back in 2 weeks. They can make a small ($25.00 approx.) monthly payment and pay it off over time. So it protects their credit rating by not bouncing checks, paying bills on time, and paying off a loan over time. Payday lenders are run by people looking to make MONEY, big time MONEY, they are not a service organization looking to help a person out!

Bulldozer | 12:06 p.m. Oct. 2, 2007

Walker said Utah payday lenders will now ask potential customers if they are active members of the military. If they are, "we cannot offer them a loan.

Oh really - sounds like "profiling" based on a lifestyle choice, that's illegal - ask any gay!

"you can't force a business to enter into a transaction that causes it to lose money," Walker said.

Oh really - obviously Walker hasn't been to a hospital emergency room recently. Perhaps he can't find one because illegal aliens have forced them out of business!

Steve from Jacksonville, Fl | 12:06 p.m. Oct. 2, 2007

I was active duty for 6 years. In that time, I received base pay, free housing (or comparable allowance) and free food (or comparable allowance). What do these servicemembers do with their paychecks? I used to party hard, blow cash on music and stereo equipment, and still had money left as an E-3.

Perhaps they have more kids than they can afford (a situation I made sure not to be in.) The military is the only institution I know of that pays members more for having dependents.

At the end of the day, these reckless service members are being victimized by legalized loan sharks. The only solution to this problem as I see it is to teach these service members to live within their means and pretend like payday loans are not an option...perhaps a lesson most Americans need to learn.

Mercy | 12:11 p.m. Oct. 2, 2007

At least we are one step closer to limiting these LOAN SHARKS. Back in the early 1900's with the Mafia, their loan sharks would charge 150% and that was sick then. Please don't tell me that there are people out there who think that 500% is ok!! It is wrong people. I have personally worked on behalf of consumers in crisis, and I once worked with one person who had 10 Loans. I tried to help her work out payment arrangements with these places like Check-City, Dollar-Loan Center, Fast Cash, and every single one of them went back on their word, screwed her over and took her to an attorney. They skipped collections all together and took her right to court. These people are absolutely ruthless and have no mercy. Do not side with them, support legislation against them!! Take it from someone who has worked directly with them many times before on the consumer's behalf. They are dragging down our middle-income and lower-income classes and it has already started coming back to bite the US economy. Open your eyes it affects all of us.

Give me a break! | 12:24 p.m. Oct. 2, 2007

Those payday loan business owners aren't worthy of licking the bottoms of the boots of the great soldiers of our country who are defending our country. These so-called honest business owners are taking advantage of everyone with such exorbitant loan fees and interest rates. The least they can do is follow federal law.

Elizabeth | 12:35 p.m. Oct. 2, 2007

I would love for a company to become to the American public who would give 7-9% personal loans to Americans all over the country like in the 70's. What a relief and comfort it would be to the military and the poor and the needy! You are punishing the men and women of our country who provide the very freedom you enjoy while raping and pilaging the very people who need the service the most. What has our political self tell us about us? We are the greediest nation in the world, no wonder other nations hate us, we use our own people to get rich off of. And the politicians, well, it's all a bunch of the same old stuff, democrats promise to help and republicans alike are all the same. I pity this nation, the needy and poor need us, but all the while we are fleecing the poorer of the poor!!! Shame on all of us, we use to be a great nation, one with a helping hand, now the hand can be found only in the pockets of our poor and military who have choosen to protect all the idiots making the rules!!!

Elizabeth | 12:40 p.m. Oct. 2, 2007

I would love for a company to become available to the American public who would give 7-9% personal loans to Americans all over the country like in the 70's. What a relief and comfort it would be to the military and the poor and the needy! You are punishing the very men and women of our country who provide the very freedom you enjoy while raping and pilaging the very people who need the service the most. What has our political self tell us about us? We are the greediest nation in the world, no wonder other nations hate us, we use our own people to get rich off of. And the politicians, well, it's all a bunch of the same old stuff, democrats promise to help and republicans alike are all the same. I pity this nation, the needy and poor need us, but all the while we are fleecing the poorer of the poor!!! Shame on all of us, we use to be a great nation, one with a helping hand, now the hand can be found only in the pockets of our poor and military who have choosen to protect all the idiots making the golden rules!!!

Skeptic | 12:40 p.m. Oct. 2, 2007

Every member of the US military has access to free housing and meals, and a paycheck substantially above the minimum wage. Any who are living hand to mouth are high risk borrowers, plain and simple - and this is understandable since a great many of them are spending their first months and years outside their parents' household. I'm afraid this law is having the unintended - but foreseeable - consequence of depriving them of a service which they would prefer to be able to use.

Education of every new enlisted person would be a better alternative, more consistent with American ideals of free enterprise and personal responsibility.

absolute | 12:45 p.m. Oct. 2, 2007

I want all of you to do me a favor on this message board, get out your pen & paper or keyboard. Write your thoughts in a letter to our legislature. This is a HUGE problem. Look around, as stated in one example, one person making 70K can't stay a float. This effects everyone, since we are a whole as an economy, local or national. Aren't we lucky to live in a country where free capitalism roams & you can make a buck from those drowning in debt? These people don't care about ethics or what is right. Laws have flaws, so let's make a difference people. Use your time wisely contribute to society and please write to the following:
James V. Hansen (District 1), James Matheson (District 2) or Chris Cannon (District 3)
Utah State House of Representatives
W030 State Capitol Complex
Salt Lake City, Utah 84114

Telephone (801) 538-1029
Fax (801) 538-1908

Financial Education | 12:55 p.m. Oct. 2, 2007

The Payday Lenders are a reflection of our society. Unfortunately, many people in our society do not understand the basic principles of wealth. For example, many do not understand the difference between income and wealth or the difference between needs and wants. This lack of understanding causes problems for many people.

In order for a society to be wealthy, its citizens must learn how to be wealthy.

Concerned for the Military | 1:12 p.m. Oct. 2, 2007

How and why are we not calling our government officials to cause an investigation on why it is alright to profile our military men and women. You say these people need an education on fiscal responsibility? For what, being too poor to buy food or pay rent (not living on base). Why does every one profess to care about their neighbors and then talk crap on them when they are in need? Where is Christ in all this? Why haven't the good people of this Nation and the State of Utah rallied around to put these thieves out of business? This is not a good situation where we as Christ like people stand around and do nothing but write on a message board. If you are in disgust, call or write a member of the local legislature or other official to make some change on behalf of these families, all families. Remember the rule, the one with the most gold makes the rules... how sad that our officials turn their backs on the very people who have elected them, you would think they would listen and do politics our way...

dougb | 1:26 p.m. Oct. 2, 2007

It is immoral and embarrasing the way less thoughtful people are jumping the gun here and trying to argue two completely incongrous arguments in an effort to paint the Payday lenders as the bad guys.

Either the Payday lenders are simply a necessary financial tool for the poor since our banks and credit unions are so rapaciously unserving of a family fallen on hard times *or* they are luxury quick loan that should never be used by our armed forces that we admitedly do such a poor job of supporting as a nation and they should be *commended* for protecting our soldier's families from a service they can't afford.

If they *should* offer services to military then you seem to be arguing it's not an overprofitable racket, but if they *shouldn't* then why wouldn't you commend them?

You can't have it both ways, lol.

Financial Education | 2:04 p.m. Oct. 2, 2007

Concerned for the Military:

It does disgust me that people are borrowing money from payday lenders. The best way to avoid payday loans is with knowledge. People should try to become financially educated. Parents should teach their children how credit works, how to prepare a budget, how to save for a rainy day, and how to invest. High schools should offer a math course that focuses on the basics of personal finance.

We live in a capitalist society - if you want to be a good citizen in this society, then become financially literate.

I'm also concerned about the military. My father is retired army and my brother is preparing to leave for a tour in Iraq. I grew up around the military. Based on my 18 years of observation gained from growing up in military communities, I can say that many members of the military would benefit from financial education.

Usary laws past due | 2:10 p.m. Oct. 2, 2007

All consumers need usuary laws. While I appreciate the fact that military personel need protection...So do consumers in general. When credit cards companies can charge around 30% interest...It's radiculous. Caps should be placed on all fees. People don't always bounce checks on purpose, and it doesn't take many insuffient funds fees @ $ 18.00 a whack to put you on a downward spiral that's hard to get out of. While increased risk should require a higher rate, and if you bounce a check, there should be a fee(A limit as to how many they can impose in a given time frame shouldn't be asking too much.)...There's no excuse for charging more than 18% interest.

Tom Lvell | 2:37 p.m. Oct. 2, 2007

Your doing them a favor, payday loans are A SCAM!

veedub | 2:44 p.m. Oct. 2, 2007

The solution is simple. Since payday lenders claim they can't survive on 36% interest rate, we should encourage the legislature to make that (or a lower) rate required for all borrowers, not just the military. Then we might be free of this scourge of usurers.

Payday for the poor | 2:58 p.m. Oct. 2, 2007

Perhaps the military should hold financial courses for its troops? Obviously, anyone using payday lenders does not know how to manage their money.

Hey Absolute... | 3:19 p.m. Oct. 2, 2007

What makes you think that James V. Hansen is still in Congress representing the 1st District in Utah? Check your facts (and current list of Congressmen) out before posting. It'll increase your apparent intelligence quotient considerably. Please don't use Wikipedia as a "reliable" source. It's like reading grafitti on bathroom stalls as far as an accurate source of information.

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