Payday lenders take to the web
Despite a bad reputation, payday loan stores are popping up on every corner and now, online. Scott asks Stephen Franklin about the success of payday lenders and the pitfalls of signing up.
Payday loan sign (iStockPhoto)
TEXT OF INTERVIEW
Scott Jagow: They have names like "Check n' Go," "Get Instant Green" and, of course "The Money Store."
In 1995, there were something like 200 payday loan stores in America. Now, there are 24,000 -- more branches than Starbucks and McDonald's combined -- and payday loan centers aren't even legal in some states, so quick cash web sites are popping up.
Business reporter Stephen Franklin wrote about this issue for the Chicago Tribune. Stephen, why have these loan stores exploded in the past decade?
Stephen Franklin: Well, there was deregulation, banking deregulation. High interest rates lead a lot of states to withdraw the usury laws and then there were various court rulings that opened the way for interstate banking that opened the door for companies to suddenly realize they can do business across state lines.
Jagow: Besides the stores that you see in your neighborhood, now there are these online payloan sites. What's the difference between the two?
Franklin: Well, the difference is dramatic. Basically, you write a check and say, "If I don't come to pay this bill back, then you can cash my check." When you go to an online site, you do this electronically and they have the right to go into your checking account and take the money and you almost can't stop them. The other difference is you often don't know who the people are who you're dealing with. When you go into a payday loan store, you see a sign, you look at people. The problem with online is you have no idea and often times they hide.
Jagow: So given that, why on Earth would anyone grant a stranger who they've never met online access to their checking account?
Franklin: I think the answer is people want money and many of these payday loan sites look very legitimate and very decent and honest and my suspicion is that -- and the people I've talked to have said this -- is that you don't have to go to a store. You can do it at home or at work. There's no embarrassment to it and it's very fast.
Jagow: I've heard about these interest rates that can be 800 percent and you cite even as high as 2,000 percent in your story. How do those kick in? Is it automatically or if you don't pay within a certain amount of time?
Franklin: No. The minute you borrow money, you borrow at that rate.
Jagow: But if you're going online and you have a checking account with a bank, why would you need to get a loan from a payday loan site? Why couldn't you just get a credit line from your bank?
Franklin: That's the core of the issue. What you tend to find is that the people who use payday loans are people who have bad cash. They have no credit reliability and that's why studies have indicated that the bulk of people who use payday loans are working poor at low-moderate income.
Jagow: So they people who are doing this, do they actually know what they're getting into: a 2,000 percent interest loan?
Franklin: There are several ways of explaining it. I've talked to folks in different groups. There are those folks who walk into a store and look at a sign and the sign says, "Payday loans in this state are capped at this figure" and they figure, "Oh, this is a payday loan." Well, they're really taking a loan that's in a different category and they don't know what's happening. They don't realize that they're getting this high rate. There are other folks who realize that's the rate but they have no choice: there's an illness in the family, they're going to lose a car, they can't pay a hospital bill and they figure, "Whatever it is, I'll do that." And then there's a third group that just can't get out of a rut and they're sort of addicted to having money when they need it.
Jagow: So with the recession or threat of recession and the economy definitely in a downturn, are we seeing more middle-class people turning to these kinds of loans?
Franklin: That seems to be the case. Not all payday loan companies are publicly held. There are a small number and they seem to indicate that's the issue.
Jagow: Overall, between the federal government and the states, how well regulated are these payday loan sites and stores?
Franklin: Two big differences: where payday loan companies operate in the states have laws controlling them. Some states have absolutely no caps at all. When you're doing online, again, the situation becomes wildly different, because many states don't have the ability to track who goes online and often what people have told me is that the online companies are just too difficult to find. The only way they know about them are when they have complaints. The online companies often will say, "We are outside the United States" and they'll use small countries like Costa Rica or Grenada and therefore, they're outside of U.S. law.
Jagow: Well, payday loan stores don't have the best reputation, but obviously there's a market for this. Do these companies provide a service that is valuable?
Franklin: The payday industry will tell you that they serve people who can't get money. Consumers say it is predatory and usurious to charge someone 400 percent, 600 percent and that states should provide options -- credit unions, banks -- there should be ways of helping people get through this crisis without facing such onerous interest rates.
Jagow: Stephen Franklin, business reporter for the Chicago Tribune. Thanks for joining us.
Franklin: Thank you.
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From vancoucer, 04/28/2009
Who are these REAL People? 75% with income under $50 thousand Women – 62% with children at home Young – average age under 42 Educated – most have some college Employed – 100% Banked – 100% Our members – estimated 20%.
To Learn More Visit the NCUF Knowledge Center Contact your League Liaison or your Field Coach Contact NCUF – Jeff Purvis/Lois Kitsch 800 356 9655.
http://www.unclepayday.ca - Payday Loans in Alberta - Fast Cash - Instant Approval.
From altamont spring, FL, 02/19/2009
Payday loans ("cash advances" or "deferred deposit" loans) are short-term loans for immediate cash. In a typical case, a borrower gives the payday lender a $300 check or debit authorization and walks out with $255 cash; the loan is due in two weeks.
If the borrower can’t afford to repay after two weeks, he must pay another $45 in rollover fees to extend the loan an additional 2 weeks. In this "debt trap," consumers typically pay much more in fees than the amount they originally borrowed. And rollovers are the rule, not the exception: 91% of all payday business is repeat business from borrowers who receive five or more loans per year.
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jose
Payday loans up to $1500 in as little as one hour.
Payday Cash Advance Loan
From WA, 10/21/2008
Aldous Huxley, author of the classic novel, Brave New World, gives his readers a “warning” of what would come to pass if the government completely controlled our everyday lives. Published in 1932, Huxley wrote the book based on his prediction of how London, his hometown, might look in the year 2540, assuming the continuance of programs to end war, conflict, suffering, and antagonistic (aka: “free”) thought. Huxley painted a picture of what the world would look like if people were unable to speak their minds, or live how they want to, free from the confines of the multiple levels of government. Many people criticized and continue to criticize Huxley for his novel. Several seeds have been planted in the U.S., which have created alarming parallels to Huxley’s novel. The socialist and communist movements have been lurking in the shadows of America for many generations, but the movements have recently come to the forefront of the political platform. Some politicians are attempting to assign the government exclusive control of too many aspects of daily life. For example, in certain areas of Los Angeles, elected officials have created restrictions on where new fast food restaurants can and cannot establish themselves. Yes, you heard me right; the “man” is telling you that you can’t get a juicy hamburger and fries in South L.A., whether you like it or not. What’s worse is that state and national politicians are trying to rob you of your right to access fast and easy payday loans. Politicians want to eliminate payday loans in an attempt to win the votes of bigger corporations like banks, so they can take office and promote their self-interests. Stand up and be heard. Fight to free yourself from the government’s ever-increasing power over your daily life.
Post Courtesy of Personal Money Store
Professional Blogging Team
Feed Back: 1-866-641-3406
Home: http://personalmoneystore.com/NoFaxPaydayLoans.html
Blog: http://personalmoneystore.com/moneyblog/
From unites states, FL, 10/20/2008
The Arizona Credit Union System would be very happy if payday advance companies shriveled up and died in the Grand Canyon State, but their opinion is certainly greased by the wheels of their own commerce. The credit union is stepping up its lobbying efforts to crush the competition and absorb all the former cash advance customers into their coffers. In a massive E-mail campaign that they estimate will reach as many as 1.6 million credit union customers, System will encourage voters to give Proposition 200 an emphatic thumbs down. On the flip side of the coin, Prop. 200 supports organizations like the Arizona Community Financial Services Association that claims that Proposition 200 will indeed lower state loan fees, eliminate extensions by introducing flexible payment plans, regulate Internet lending and cull the number of total walk-in stores in Arizona. These very real reforms will not only help payday loan customers, but will keep industry employees off the breadlines past the current lending sunset year of 2010. Who wants to lose their job, particularly in our current economy? Post Courtesy of Personal Money Store Professional Blogging Team Feed Back: 1-866-641-3406 Home: http://personalmoneystore.com/NoFaxPaydayLoans.html Blog: http://personalmoneystore.com/moneyblog/
From spokane, WA, 10/11/2008
David Kernell, the 20-year-old son of Democratic Representative Mike Kernell of Tennessee, got popped. According to CNN (“Democratic lawmaker's son indicted in Palin hacking”), he reset the password and gained access to GOP VP candidate Palin's personal E-mail account. It is alleged that he read the contents, took a screenshot of her E-mail directory and obtained other personal information. The information that may have been compromised includes E-mail addresses and pictures of family members, one or more cell phone numbers of family members, family birthdates and more from Palin's address book. Interestingly, after turning himself in, David Kernell pleaded not guilty. He pleaded not guilty despite the fact that he (allegedly) took the information he hacked from Palin's personal account and posted it to a public Web site. Not only that, but he posted the new password he’d created, which would enable others to easily access Palin's E-mail themselves and view any of the contents. As a result, Kernell Junior may be subject to the heat of a five-year prison term, $250,000 fine and three years of supervised release. That’s enough to turn anybody into a fluffy white piece of popcorn. At the maximum of $1,500 per loan, that bail would require about 167 individual payday loans to free that fluffy little popped grain treat from being overcooked by cellmates.
Post Courtesy of Personal Money Store
Professional Blogging Team
Feed Back: 1-866-641-3406
Home: http://personalmoneystore.com/NoFaxPaydayLoans.html
Blog: http://personalmoneystore.com/moneyblog/
From United states, UT, 09/14/2008
Despite of the bad reputation of the payday loans they seem to be that they are successful, not only that through the years since our economic condition of the country is slightly going down this payday lenders has the opportunity to has their faster rapid growth. That because during the economic crisis they are tend to have experiencing hard life that sometimes if you will not have the determination in life you will become nothing and useless that’s why payday loan is in demand today whatever there will be saying of,
Post Courtesy of Personal Money Store
Professional Blogging Team
Feed Back: 1-866-641-3406
Home: http://personalmoneystore.com/NoFaxPaydayLoans.html
Blog: http://personalmoneystore.com/moneyblog/
From MD, 08/15/2008
Consumers turned to payday loans due to mortgage crisis of a specific nation, that is why payday lending industry has grown rapidly over the last several years.
The growth in the payday industry has been fueled by very high profits—an estimated 34% pre-tax return. Payday lenders need only a small amount of cash to make loans. After the first loan, the borrowers are simply reborrowing the money they just repaid, minus the fee. Moreover, these lenders charge annual interest rates of 400% or more, which is much higher than the risk these loans carry.
Banks are also becoming more active in this industry, by providing capital to payday lenders and entering into partnerships to originate payday loans in states that prohibit stand-alone payday lending. This practice is now under attack by some federal regulators and state attorneys general. For example, in Georgia and in Maryland, legislation has been enacted to prevent this kind of arrangement.
I have read an article on this site, which tackles about the controversy of payday lenders. http://personalmoneystore.com/moneyblog/2008/07/24/think-payday-lenders-are-getting-fat-on-profits-think-again/#comment-61
From MD, 08/15/2008
Consumers turned to payday loans due to mortgage crisis of a specific nation, that is why payday lending industry has grown rapidly over the last several years.
The growth in the payday industry has been fueled by very high profits—an estimated 34% pre-tax return. Payday lenders need only a small amount of cash to make loans. After the first loan, the borrowers are simply reborrowing the money they just repaid, minus the fee. Moreover, these lenders charge annual interest rates of 400% or more, which is much higher than the risk these loans carry.
Banks are also becoming more active in this industry, by providing capital to payday lenders and entering into partnerships to originate payday loans in states that prohibit stand-alone payday lending. This practice is now under attack by some federal regulators and state attorneys general. For example, in Georgia and in Maryland, legislation has been enacted to prevent this kind of arrangement.
I have read an article on this site, which tackles about the controversy of payday lenders. http://personalmoneystore.com/moneyblog/2008/07/24/think-payday-lenders-are-getting-fat-on-profits-think-again/#comment-61
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