Posted on 12/01/2006 10:30:23 AM PST by shrinkermd
Cash-starved Americans, many of them serving in the U.S. military, are watching an increasing crackdown on one of their most frequent sources of last ditch credit - payday loans.
Even Congress has clamped down on the practice, but a spokesman for the payday loan industry Thursday told Cybercast News Service that criticism of the loans is being led by "elitist" consumer groups whose members "never have to go paycheck to paycheck."
Payday loans allow individuals to stay financially afloat between paychecks. They are short-term cash loans in which the borrower often hands over electronic access of their bank account to the lender so the lender can then gain access to the borrower's deposited paycheck to get repaid.
Huge finance charges can accumulate from payday loans since the borrower has the option of renewing or "flipping" the loan in exchange for another fee. Critics of the industry also say millions of people take out multiple loans, paying one loan with the proceeds of another and end up getting caught in a financial trap.
In September, Congress passed an amendment to the Defense Department Authorization bill, creating a 36 percent cap on interest rates that members of the military can be charged on loans. A Virginia state legislative committee next week is also expected to take up legislation that would produce more restrictions on the industry.
(Excerpt) Read more at cnsnews.com ...
Those places are nothing but legalized loan sharks.
If I should ever get into a car accident, I will be sure to blame the damn road.
Good scam if you're the one-side....
ain't the payday loans, but abuse of them - people making their own bad decisions.
Nah - it's the car manufacturer........
Exactly. Nothing much said here that indicates the reason they're "the poor" is in large part because they managed their money so badly in the first place, nor is much said about the fact that although almost everyone warns against these "payday" loans, they still apply for them.
Some might actually these high interest rates "supidity tax."
Title loan places are just as bad, if not worse, plus their TV commercials are painful to watch.
One of the things that can help alleviate this problem is to reinstitute the practice of not allowing a servicemember to Marry before they reach a certain rank. (Usually Sgt/E-5)
There were far fewer financial issues amongst the troops when this was in effect.
"supidity tax.""
I thought that was called "the lottery".
Isn't Gary Coleman one of their spokespeople?
I've been in a position, from time to time, to help the poor- in so far as we could. The way they allocate resources leaves no doubt as to why they have nothing.
This is call USERY and comdemmed in the bible and in most cultures. They need to be shut down they prey on hte young and ignorant.
I see the damage payday lenders do on a weekly basis. We are trying to educate our young Marines(the people most suceptible to these crooks) that they have numerous, and better options than payday lenders. It's hard when these guys set up shop right outside the gates. Get your hands on one of these payday lender contracts and read it thouroghly, it will shock you how much they gouge people. These lenders also encourage customers to roll the loan over, this is when the customer pays only the interest on the due date and continues the loan untill the next payday. Payday lenders are vermin!!
What's ironic about calling the high interest rates "stupidity tax?" They are warned over and over about these kinds of loans, yet, they go out and get them. If someone ignores all the warning signs about quicksand, and still walks into it, what is that if not stupidity?
One thing that might help is learning simple math (not "fuzzy" math!) in schools, but for some, not even that would help.
We ARE responsible for our own acts, and that includes making bad decisions. When we goof up, we pay the stupidity tax.
One of our locals wrote a letter to the editor of our daily fishwrap, last week. Here in Arkansas, payday loans are a hot topic. He says one of his daughter's payroll checks had bounced, a few weeks ago, causing her to have several checks bounce, at her local bank. As a result, several checks that she had written bounced, as well, and she incurred nearly $500 in service charges from her bank at $29.00 per check. He wondered which entity was worse; the payday loan industry or banks with "virtual loans" to cover overdrafts. I wonder, too. I suppose the banks charging these outrageous fees are the more legitimate of the two because they have larger buildings in prime locations.
So much for belief in the free market.
I know a guy that is throwing away 70% of his disability check on these places. He owes at about 5 places.
"reinstitute the practice of not allowing a servicemember to Marry before they reach a certain rank."
"if the Navy wanted you to have a wife they would have issued you one with your seabag"
That's what I was told when I was in. LOL
Not sure how well that would work in the all volunteer military.
Also, don't forget that many of our guys and gals are reserves that lost income from their regular jobs when they were called to active duty.
Many of them were in relatively high paying (compared to active duty pay) positions prior to being recalled.
There has been a huge advertising effort for a company named "Cash Call". They offer loans from $2600 to $20K with interest rates from 21% to 96%. One could pay over 44K for a 10K loan. Ouch.
"....to reinstitute the practice of not allowing a servicemember to Marry before they reach a certain rank. (Usually Sgt/E-5)"
hahaha...that is funny...
36 percent is unconscionable.
Time to bring back usury laws to keep the pirates in check.
the 'victims' are adults. are you suggesting that the government protect adults from themselves?
no one forced them to get into this.
Banks also offer overdraft protection so that will not happen.
Maybe I misread the article, but I could have sworn it wasn't talking solely about the military. We don't have a lot of military in our small town (most live closer to Oklahoma City), so most of these little mini-loan sharks who've set up shop around here are for small town non-military folks.
Our neighbor's kid, for instance, has used them a lot--and his parents bail him out from time to time--but what we see is that he takes his paycheck, spends it as fast as he can on booze, the gambling casinos, and videogames, then "runs a little short." His folks aren't helping by bailing him out. They need to teach him how to add and subtract, so that he can tell the difference between how much he's spending, and how much he's earning.
I don't think this kid is that unusual.
navy wife - seabag?
I get it!:-)
Sadly, I'll bet you're right.
The problem with these is that once the borrower pays them back, they're usually short on bills again and the cycle repeats with $100 fees every time. A more traditional loan is a better alternative honestly, even if it's at 25% interest.
Sounds like Pawn Gone Wild.
exactly...
They should be illegal just on the basis of the stupidity of their commercials.
Then again, if stupidity were illegal, most Congresscritters would be in jail.
;-)
I don't see that as a criticism of those who serve, just a criticism of how much (or little) they are paid to do so.
My wife had a payroll check bounce five years ago and her boss was an ex-banker who bounced checks from bank to bank; I called BofA, explained the situation and they voided all the service charges upon a cash deposit which my wife got the next day after telling her boss that I am an avid letter-to-the-editor contributer.
There may be something else afoot here.
I know a guy that makes very good money. He has no credit cards and maybe not even a bank account. He has an agreement (a lowere rate) with a "payday loan" place next to an airport and only takes cash or checks when you do business with him. If you give him a check, he cashes it at the payday loan place.
He uses cash for EVERYTHING.
I don't think the government likes people they can't track.
You mean like, using food stamps to buy filet, and spending all their money on beer and cigarettes while the kids walk around hungry and naked?
>>Some might actually these high interest rates "supidity tax."<<
That's what I call lottery tickets. :)
I guess the question is, is it the goverment's job to protect the ignorant (not to say stupid) from themselves? My natural tendency would be to say no, but the predatory practices of these outfits are quite appalling.
Loan sharks usually have more dignity than these folks.
It is morally irresponsible to allow a fool to keep his money.
If you qualify credit-wise, which some people don't.
Actually, the one I remember most was grabbing a taxi to run across town because he had some coupons for a store there.
This is usury, pure and simple. These folks prey on the poor and the ignorant like loansharks did a generation ago. Except it's legal now.
The fact that something is legal does not make it right. Usury runs against Scripture and is immoral.
I admit, this whole "payday loan" thing is unfamiliar to me; I don't think I've even seen the ads that some people mention. I was taught very young to handle money responsibly, by parents who always did so, and that's one of the best gifts parents can give.
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