Deseret News | Payday lenders tells military 'no'

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Payday lenders tells military 'no'

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george | 3:33 p.m. Oct. 2, 2007

Why blames the business person, at least he is clear on what he charges. Either educate the fools that use these companies or/ oh yes ....I forgot .... it speaks to the kind of people recruited into the military!!!

BH | 3:36 p.m. Oct. 2, 2007

Hey, here is an idea. All you high minded people that think these payday loan places should be out of business need to get together and open up your own payday loan store. Set your rate at say 25% interest. Your competition will drive the 500% dudes out of business. And think of the moral service you will be doing for your cusotmers.

What, you say it more funto whine about the other guy and demand that the government do something about this "great travesty" than do anything yourself. Oh, you say that when you really do the numbers, you wouldn't make any money considering the cost of initiating loans that last only 1 or 2 weeks, to high-risk applicants?

Here is another solution. Each of you can start offering financial counseling to the military. That is another way of driving them out of business.

Thomas | 3:38 p.m. Oct. 2, 2007

What's hilarious is that the same government that condemns the "predatory lending" of payday lenders, out-loansharks the worst of them when it comes to interest and penalties on unpaid taxes.

There should be a Constitutional amendment that requires the government to abide by every single law it imposes on the rest of us.

Comments continue below

ogden, ut | 3:57 p.m. Oct. 2, 2007

members of the military who use payday loans need to be told no -- as do anyone else who uses them. Really, the rates they charge are so usurious that the only way anyone needs their service is if they have so badly botched their personal finances that no other option is open, and this is not an option so much as it is a bear trap.

Sadly, they are a reflection of the American mania of the last several generations to always want what we want when we want it -- delayed gratification is a mystery to most people. Anyone can save what these places loan, typically several hundred dollars, that is enough to handle any small emergency without paying these sort of interest rates.

ogden, utah | 3:59 p.m. Oct. 2, 2007

actually, BH, some high minded people who think these placse should be out of business have done exactly that -- it's called Utah Saves, and it shows people how to save an emergency fund to get past the emergencies that send them to payday loan shops. They don't charge any interest, the service is free, and people learn to live independently.

BH | 4:11 p.m. Oct. 2, 2007

Ogden, Utah:
That's Great! Now that's what I'm talking about!

People of action that feel they can make a difference and do what they can, instead of sitting back and complaining about the injustices in the nation, and expecting the government to further legislate and control our lives, in order to protect us from ourselves.

Barry Nay | 4:15 p.m. Oct. 2, 2007

I think it is time that our legislature says "NO" to pay-day loan business. Rates that high (36% or 536%) are usury pure and simple. They prey on the segment of the population that are the most needy and can least afford it. They are predatory. I say we ban them entirely in our state or limit their rates to something more sane like we do credit card companies.

Fredd | 5:19 p.m. Oct. 2, 2007

George--It speaks to the kind of people recruited into the military? Patriotic young kids living away from home for the first time? I hope you see this post. You are not fit shine the boots of our young military members. very few use these services but they are aggressively marketed to them. maybe they should follow Utahn's example and declare bankruptcy? Of course the military will punish them for that. And for bouncing checks. Did you ever think they use these services to avoid the consequences of financial irresponsibilty that their non military peers routinely get themselves into?

park city | 5:31 p.m. Oct. 2, 2007

i love all these 'educated' people talking about how payday loans make a killing. the real killing is running a bank. you got a society of people who think they are high-class [because they don't have to go to a payday loan place] but all these people are still living paycheck to paycheck more or less. and then if you just process their withdrawals before their deposits, bingo. 39 bucks a pop.

my 3 cents | 5:50 p.m. Oct. 2, 2007

I don't like these guys. But, like bars and tabacco stores, they exist here and are frequented by consumers. We have our free agency. We can budget better - perhaps doing without that trip to McDonalds, or do (gasp!!) without Cable or Satalite TV. Some might even be happy without cell phones. and doing without a credit card could happen. But, because folks have not learned to live within their means they rely on borrowing from Peter to pay Paul. If the military can't borrow , it's because a company has made the business decision not to lend. Maybe instead of getting mad at the pay day loan industry, we get mad at irresponsible people who have not learned how to balance the checkbook and live within their means.

Dale | 6:15 p.m. Oct. 2, 2007

Guns don't kill people, the government does.

Hang on | 8:33 p.m. Oct. 2, 2007

As a person who has worked for an online payday loan company, might I add one note. For our company, the average customer made between $30K and $60K a year. These aren't exactly poor or needy people. These are people who simply have never been taught to SAVE. Its the same for anyone, military or not. Whatever you are earning, a piece needs to be put aside for a "rainy" day. I'm a poor college student and its a simple lesson. Don't be fooled. The payday loan industry thrives for one reason, people are not being taught to save for hard times. Teach your kids this lesson, then the payday loan industry will disappear.

Spanish Fork | 9:04 p.m. Oct. 2, 2007

Before the mid 70s we had usury laws against this sort of thing. It was also called "loan sharking," and the debtors had the fear of broken fingers to help them pay up. The military is in a similar situation. These loan sharks threaten to inform their command if they don't pay up, along with garnishment of wages, a much heavier hammer than the civilian population. Why do you suppose that there are so many of them just outside of the military gate? Unpaid debt can be a serious career breaker, and makes the service member ineligible for a security clearance or overseas deployment.

Joe Moe is right | 9:31 p.m. Oct. 2, 2007

Deeper issue to this problem is unfulling materialism of the majority of country's population.

Jason | 9:54 p.m. Oct. 2, 2007

Payday lenders are a cancer in Utah. They prey on the poor and uneducated and deprive them of what little money they have. As one of the largest contributors to statewide political campaigns they also have been able to thwart legislation that would impose even minimal limits on their loan rates. Because our state legislature has done absolutely nothing to stop them from exploiting our military service members, the federal government had to step in. I'm glad that they did. Maybe we'll see some close shop now around Hill.

Dave | 11:33 p.m. Oct. 2, 2007

Soon these loan sharks will see a new law requiring them to offer their services to the military. It's just a short time, the loan sharks will get their come-uppance on this issue. Many can play this game, and we the people, thru our lawmakers, can call the loan sharks to task. 36% is still pretty darn high for a paycheck that's usually no risk for the loan company.

Lee | 12:20 a.m. Oct. 3, 2007

What ever happened to personal responsibility. Why do we have to have the government step in and pass a law to protect our own stupidity?

But if we are going to pass a law what about credit card companies who charge $249.00 in annual fees on a credit card with a $300.00 limit? What would the annual APR on that be? What about banks that make more in "fees" than they do in actual interest?

While we are at it, why not pass a law that gives all our money to the government and let them tell us what to buy, where we live, what job we have, etc. so that we don't ever have to worry bout 'preditory' lenders, banks or credit companies again.

Education (and personal application of that knowledge) regarding financial and personal responsibility is the on only answer to this problem.

Me | 1:25 a.m. Oct. 3, 2007

Be realistic. The people using these types of businesses, military or civilian, aren't going to apply the lessons learned in any financial classes until they hit rock bottom, but by then their finances and credit have already gone down the tube.

For example, in the military there are four necessities: girls, beer, cars and internet (not listed in particular order) PFC Joe Snuffy is not going to pay attention to any financial education classes, even if he is required to attend them and policed to stay awake during the class...Also, since while he's deployed the only one of these necessities he can have is internet, he'll find some way to blow his money, like purchasing weight suppliments, energy drinks, plasma TVs, play stations, and computers before he gets home. Therefore, when he gets home and blows the rest of his money on a brand new car he can't afford, he'll use whatever means necessary to get a loan to acquire his other necessities.

This is one of those things that the only solution is regulation...I'm sure most disagree with that statement, but it's true. Joe isn't going to blow his money on something if he isn't allowed to do so

Sdem | 8:06 a.m. Oct. 3, 2007

These "lenders" do not make enough money off the others they lend to, that they cant drop their rates for people serving their country? I hope they all get run out of business then by the government

george | 8:10 a.m. Oct. 3, 2007

Fredd:
While I would agree bias' are showing, I do not believe that just because someone is in the military - that they are patriotic. Usually it is because of economic condition - not patriotism. ( particularly - in case of those that use these services). As for shining boots ----- does it matter???????????

Anonymous | 8:27 a.m. Oct. 3, 2007

Ignorance is bliss on this thread. How many of you would be upset if 1 in 4 or 2 in 5 of the products you purchased were defective and you had no means of replacing the product because the company was no longer around? That is the default rate on these types of loans. How many of you want to lend your money to people knowing that 1 in 4 or 2 in 5 people will never repay because they simply never intended to?

$15 per $100 loaned allows these companies to survive if they can keep the default rate below the ratios mentioned above. You cannot compare these rates to auto or home loans. Those loans are collateralized which means the lending institution has a means of recovering should the borrower default. The payday lenders do not have collateral on their loans and if a borrower wants to they can become invisible.

The amount of work required to collect on these defaults far exceeds any of the fees that are charged. The lenders only make money if the customer makes their payments as agreed. The problem in this industry is the users themselves lack financial discipline.

Lender | 8:49 a.m. Oct. 3, 2007

We CANNOT stay in business and charge 36% APR. At that rate we would only generate $1.38 for a $100 loan. You tell me what financial services company can stay in business and only make $1.38 on a loan. That wouldn't even pay the teller their wages to say "Hello". And Utah state law prohibits payday loan companies from charging interest past 12 weeks. Common sense... the shorter the term on a loan the higher the APR has to be to even break even!!

To Lender | 9:15 a.m. Oct. 3, 2007

Lender,

Since it appears that you are in the business, now is your chance to defend yourself. Take out your calculator, do an imaginary loan for $500 with your current interest rate. If you have the guts to post on here what the balance will be after 12 weeks, and you can honestly say that you aren't taking advantage of someone who you know will NOT repay the loan on their next payday.

? for Lender | 9:31 a.m. Oct. 3, 2007

Lender, under what terms of the loan would you only make 1.38? Under those same terms, how much do you make with your current interest rate? Lastly, can you stay in business with that amount or do you rely on default to make your money?

The Truth | 9:51 a.m. Oct. 3, 2007

It amazes me that an article can be printed that so mis represents the facts. If you had done your research you would know that the DOD act not only limits the APR to 36% but it also expressly forbids any loans that are secured by a check or auto title. Payday lenders didn't CHOOSE not to do these loans. It is against the law for them to lend to the military now.

FritZ | 10:21 a.m. Oct. 3, 2007

What about the whole income to dept ratio that if you're in the military and your dept is more then your income you DON'T have to go to war??? I've heard that's what a lot of military were doing do keep from going. But we can't say that, no that's bad press...

TruthTeller | 10:55 a.m. Oct. 3, 2007

I guess our fellow Americans are just too stupid to read and understand plainly posted fees notices at a payday lender store. I'm sure that it might be worth 15.00 to borrow 100 to get your car fixed, and save your job-but why give them that option? It's not like we live in a free country or anything like that.
While we're at it, it looks like we have a bunch of dumb people taking out mortgages-let's stop that too-we have to protect these fools from themselves after all.
I guess the best option really is putting the arm on one's parents and friends.
Thanks to all who want to take options away from the American people. You are so wise.

Anonymous | 12:46 p.m. Oct. 3, 2007

I think that the members of the military will just use pawn shops more....Then they can pay even more interest . Our congressmen are so smart.

Outsider looking in | 2:21 p.m. Oct. 3, 2007

What happened to personal responcibility in this country?

Everyday we keep trying to regulate every aspect of the lives of the "uneducated ignorant masses" for their own protection.

Lets think for those who are too stupid to think for themselves

Surely all the critics who have spoken in the forum and labeled this industy "loan sharks" would have never been foolish enough to use these services.

So why are they so upset?

Are they confused that APR stands for ANNUAL PERCENTAGE RATE and that payday loans are not annual loans so APR is really non applicable?

Did someone force them into one of these stores and demand thay take money?

Or just maybe did they do so because it was the easy thing to do. Did they trick themselves into beliveing that the funds that they just borrowed would just materialize when time to repay?

Its always easier to rationalize away responsibility then to accept it.

Roobah | 3:44 a.m. Oct. 4, 2007

"Walker said, "This law will force the members of the military to choose between MORE EXPENSIVE alternatives....."

That paragraph says it all -- caps highlight the point... Just what do you think KEEPS payday lenders in business? A recent Deseret News article pointed out that THOSE fees approach 2000% APR -- when one considers that cost, 521% APR starts to look pretty good. When a bank charges as much as $39 per return check and a daily or hourly fee for each period of time the check is not paid, post-dated and payday loans become a "cheaper" alternative.

The Truth | 3:20 p.m. Oct. 4, 2007

Here Here Roobah. What's the APR when our fine upstanding Banks in this country charge $25 - $35 on a $10 overdraft item on a 1 day period. Tell me the militray credit unions are going to stop charging those fees to our bravest.

People don't have any clue how much this law is going to HURT the military instead of helping it. This law has taken the freedon of choice away from our county's finest, and because of the fact that we underpay these folks, they folks have little or now chance to short term financing to help them out in times of need.

Maybe if our legislators really cared about our military, they would pay them more then the poverty line in this country so that they wouldn't need payday loans. Instead of trying to judge them maybe they should try to impower them.

Student | 11:17 a.m. Oct. 10, 2007

I think that it is a good idea to give members of the military special discounts on loans but not at the expense of the loan company. They should get somewhat of a discount, while allowing the loan companies to stay in business. Althought I do agree that 36% is still a lot on a loan and that they should be able to make money on that. On the other hand I see the position that the government is trying to but the vets in. The vets should exhaust every other possibility of getting help through vet programs, relief programs with their church, military relief groups, family or others for help before taking out a loan. I am not saying that they should automatically go looking for handouts but they shouldnï¿½t get themselves in deeper and deeper debt before getting help from these special programs.

mil man | 1:18 p.m. Oct. 26, 2007

I really think it is unfair that they (gov) has banned this because.. being a single father of 4 young children with a mortgage, high utility bills, car repairs/upkeep, children's needs, etc., there comes times that things pop up out of the blue and my family runs short for food for the kids. Now my kids get to suffer because I don't qualify for welfare, can't get a quick loan, and the local agencies laugh at you when you ask for help. Even the military relief.. say oh can't help! So thanks gov. for letting my kids suffer once again! Yes some people get addicted and over the heads in debt but that is their fault! Life happens and they must learn from their own mistakes but now children go without nice meals instead!

Anonymous | 2:50 p.m. Nov. 10, 2007

wow utah is lost.I stumbled on this blog and its kinda funny.People think that payday lending is a problem.You can take away the service but you wont take away the need.internet pdls are 3xas much as these store front state regulated lenders the need doesnt go away!The need is there because of the demand. I HATE my credit cards to but I dont want them banned.Just because people dont have good credit doesnt mean they dont need money. Use your own mind and dont let the so called do gooders make your decisions for you.Giving banks a non compete in Utah is a bad idea banks are raising there credit standard and turning there backs on this part of society. Giving banks all the lending power is a stupid idea research how banning pdls in Maryland has really hurt the middle class as much as the lower middle.Banks pushed for this and continue in other states.If you want to point the finger at the problem you might need to look in the mirror.own up its hard to do but its the honest way

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