Payday Loan Times

If you work everyday but have bad credit, where do you go for an emergency loan? The only option might be a payday loan store.

Some DC Councilmembers say these businesses are located exclusively in poor communities and prey on people who they know are not likely to pay the money back in the two week loan period. After that, higher fees and interest rates kick in.

For instance, Stephanie Jones needed $200 for a cable bill. She got a payday advance loan from the “Payday Now” store on Georgia Avenue. Her fee was $30, which she called “a great deal.” She paid the loan off on time, then she went to work for the establishment.

Others have had different experiences after taking out bad credit payday loans.

Demetrius Jones, who was standing outside the “Payday Now” store, said: “They are robbing you without the gun; charging outrageous interest rates and they are only located in our communities.”

DC Councilmembers Mary Cheh and Marion Barry will hold hearings this week on a bill they have introduced to bring fast cash loan businesses under the same interest rate caps that other financial institutions face. It’s a 24% cap on loans over a year’s time.

A spokesperson for the industry says the bill would put payday loan lenders out of business because in effect it would mean roughly 90 cents on a $100 loan. Councilmember Cheh says payday loans to DC residents average 340%, while they paid $3.3 million in the year 2005 in payday fees.