Comments about ‘Payday lenders tells military 'no'’

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Companies refusing loans at mandated lower rate

Published: Tuesday, Oct. 2 2007 12:06 a.m. MDT

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mdub

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

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 consumers 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 customers 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

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?

Crazy

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

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

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

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

Jonathan

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

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

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

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

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

"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

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

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

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

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

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...

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

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.

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