Payday Loan Times

When officials at Nevada Federal Credit Union found out a quarter of its members frequented regular or online payday loan businesses when running short on cash, they decided it was time to offer an alternative.

“We’re trying to help them get out of the payday loan cycle,” said Brad Beal, Nevada Federal president. “We thought, we need to step in here and offer this at a lower cost. They need to have a means to get out of the cycle.”

That’s when Nevada Federal, which has 83,000 members, started offering what they call ADVANCpay, the faxless payday advance lending alternative. The two-week, maximum $500 loan is available to members for a one-time $40 fee.

More and more credit unions across the country are offering payday-style products to members, reports the Las Vegas Sun.
“We think it’s great,” said Sharon Reuss, a spokeswoman for North Carolina-based Center for Responsible Lending. “Ultimately it’s about helping members because if members are in bad financial shape, it’s not benefiting the credit union.”

While some short term payday loans can have up to 400 percent APR, Reuss said borrowers need all the help they can get staying out of that debt cycle.

“We think that’s much preferable to triple digit interest rates,” said Reuss.

Beal said Nevada Federal’s product works similarly to traditional payday loans, “except we charge far less than the payday lenders charge.”

He said the credit union found a few years ago, when they were surveying members to see how many were using payday lenders, that payday businesses usually charge more than $80 for a $500 loan.

Making fiscal matters worse, if borrowers can’t pay back the loan in two weeks, cash loan lenders will allow them to roll over the loan for additional fees and interest.

“With payday loans, people get trapped. Every payday they’re broke. You can’t get out,” he said. “We wanted to offer our members an opportunity to break the cycle.”

The payday advance alternative: To ensure that members didn’t run into the same problems repaying their ADVANCpay loans that some people do repaying payday loan, Nevada Federal created 18-month, 18 percent Break the Cycle loans.

Available to any member who uses ADVANCpay, the product is available along with financial counseling and education to help members with monthly budgeting and financial planning.

“There’s a huge segment of the market out there who don’t manage their finances as well as they might. If you look at the number of payday lenders up and down the street you can see that,” said Beal. “And we’re trying to help them.”

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Assemblywoman Barbara Buckley hears the story all the time. It’s the one about the fast cash advance lenders again - an industry upon which she and her colleagues attempted to impose tighter restrictions during the last legislative session.

“Just a couple of weeks ago, I saw a payday loan customer with serious mental and physical disabilities. The person borrowed $200, at 800 percent interest, for 52 weeks. After paying $1,800, the consumer is then to pay a $260 balloon payment. The business is attempting to evade all the Nevada laws passed last session by restructuring the loan not to be a short-term loan,” the assemblywoman said.

Seattle-based Moneytree is one bad credit payday loan and check-cashing company in Nevada that has made a few heads turn lately as well.

Moneytree, like its fellows, profits from payday loans and percentage-pay check cashing, and by selling phone cards and money orders. It, too, counts the less financially stable as its primary customers.

Unlike the others, reports the Las Vegas Business Press, in this alternative financial-services universe, however, Moneytree also has a long history of giving back to the people it serves.

Several days ago, the payday loan company made a sizable donation to Nevada Partners, in North Las Vegas, for development of the Wealth Building Center.

The company is underwriting the program with a $100,000 commitment, spread over five years. Moneytree’s donation specifically funds program that train children and young adults to develop financial literacy, entrepreneurial skills and lessons in avoiding the trap of predatory lenders.

Planned workshops will focus on such skills as building a budget, managing a savings account and learning to cut unnecessary spending. This is the first program at Nevada Partners to specifically address these needs.

According to Moneytree’s literature, this is the first financial literacy program it has funded in any of the communities where it operates - the provider of cheap payday loans runs more than 115 stores in Washington, Idaho, Oregon, California, Colorado and Nevada.

Payday loan climate: Moneytree’s contribution comes on the heels of an uncertain political climate for businesses that cater to consumers otherwise left behind by traditional banking service providers.

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The debate over payday loans can go on and on. Some people defend these cash loans, while others wish to find alternatives for those in need of money. One fact must be agreed upon, however:

• Across the nation, people DO search for these resources

A recent study into the popular world of Google narrows down the areas most apt to search for instant payday loan help. Analyzing the "trends" section of this search engine reveals a lot. For example …

- Residents of Apex, North Carolina ran an online search for the term "payday loans" FAR more often than any other area of the country last month. This would be at odds with the fact that the state eliminated payday loans earlier this year.

- Coming in second, with fewer than one-quarter the searches of Apex, was Las Vegas. Hmmm … we wonder why. Could gamblers hoping to reverse their fortunes be applying for online payday loans?

- Rounding out the top five cities that most commonly looked up payday loans on the Web were: Kansas City, MO; Phoenix, AZ; and Norfolk, VA. What does this show? The payday loan online world isn't confined to just one region of the country.

As far as country demand and/or curiosity regarding payday loans goes, America reigns supreme. Last month, we were about twice as likely to use the Internet for these purposes, with Canada coming in second for payday loan searches.

This is not shocking, sadly. Americans are building up more consumer debt than ever and often require payday advances to help alleviate the problem.

It was an idea hatched in Phoenix: why not spread out the locations of stores offering payday loans? The idea, supposedly, was that this would make it more difficult for individuals to acquire a cash advance.

Now, Nevada has joined in on the craze. Henderson, the state’s second largest city, is adopting new rules to curb the growing industry of payday loan lending and check-cashing centers. The area’s new ordinance expands the distance between the stores.

City officials say they’re concerned about the 31 payday advance businesses in town - including six that have opened in the last year and a half.

Las Vegas, NV — The Henderson City Council is concerned that the payday loan industry is growing too fast in Henderson. Although they recently allowed two more payday loan stores to open, they scolded the industry for its perdatory practices and warned that a new ordinance is being prepared for Henderson.

Unlike North Las Vegas, Henderson has no plans to enact a moratorium on payday loan companies seeking a permit. In July, North Las Vegas put a six-month halt on new permits while the city considers a range of ideas from limiting the number of licenses allowed per year or by population or even an outright ban on new businesses.

Henderson, however, is focusing on other regulations under consideration in North Las Vegas, including limiting the number of payday loan companies close to each other, to schools and to homes. Once a staff review is completed in upcoming months, the council will consider an ordinance.

Las Vegas, NV — The North Las Vegas City Council rejected Cash Box's bid Wednesday for a permit to open a store.

Although the city passed a moratorium which temporarily stopped any payday loan stores from opening up, Cash Box's request for the permit came before this moratorium. Even though the permit was approved by the Planning Commission, the city staff appealed the case to the council.

It's the second time this year North Las Vegas has rejected a permit for the payday advance company Cash Box, which sought to open a store at 2696 W. Ann Road. The city rejected another request by Cash Box earlier this year to open a store at the northeast corner of Cheyenne Avenue and Martin Luther King Boulevard.

Cash Box has filed one lawsuit against the city and the company's owner, Chet Cox, has threatened to file a second with the latest denial. Cash Box sought a court injunction to stop Wednesday's council hearing but was unsuccessful.

Councilwoman Shari Buck led the opposition to the store, saying there are too many in the community — there are 25 — and called the business undesirable. It's the third payday permit rejected by the council this year.

Las Vegas, Nevada - North Las Vegas enacted a six-month moratorium (temporary ban) on new payday loan companies Wednesday.

Two weeks ago the City Council imposed a two-week ban on processing of payday permits simply by setting the moratorium for a public hearing and vote on Wednesday. The council adopted the moratorium to give city officials time to develop an ordinance.

Staff will consider a range of ideas from limiting the number of licenses allowed per year, restricting the number of licenses by population, holding a lottery for licenses and even an outright ban on new businesses.

They will also review setting standards from their distance to one another and to subdivisions, establishment size and hours of operation.

Until then the city develops an ordinance, this moratorium on instant payday loans will prevent any new payday loan companies from opening up.