Payday Loan Times

News About the Ever Changing Payday Advance Industry

Rescue Loan Program Started In Montana

Filed under: Montana — Roman Parchowsky at 10:10 am on Wednesday, August 31, 2005

Billings, MT — Family Services Inc, of Billings, Montana, unveiled a new program yesterday to help families who have suffered from debt due to predatory lending, such as payday loans and title loans.

The program has two main elements. First, participating families must take a six-week "financial fitness" course that teaches participants about managing personal finances, dealing with loans and repairing bad credit. Family Service will then give them a loan to pay off their lenders. The families repay Family Service at no interest.

The "rescue loan" program, the first of its kind in Montana, received $4,000 in startup money from First Interstate Bank and a $4,000 match from E Z Money Check Cashing.

Linda Robbins, executive director of Family Service Inc., said her agency is seeing more and more people caught up in "predatory lending." Of 51 people who visited Family Service on Monday, 15 were having difficulty with loans, including title loans. Many are low-income clients with poor credit who find it hard to get loans at traditional lending institutions and often turn to payday loans.
irst Interstate Bank officials agreed to kick in $4,000 for the program if they could find matching funds. Robbins approached Bernie Harrington, president of E Z Money Check Cashing, a local "deferred deposit" lender. He didn't hesitate, Robbins said.

"He said, 'I'll do it,' " Robbins said. "It was just that easy."

"The thing that really sold me on the program was the financial literacy course requirement," Harrington said. "Borrowers get in over their head when they abuse any type of loan product, and if we can prevent that from happening through education, both the borrowers and lenders will be happier."

Proposed Jacksonville Ordinance Targets Payday Advance Lenders

Filed under: Florida — Danielle Mason at 9:42 am on Monday, August 29, 2005

Jacksonville, FL — A proposed city ordinance would cap interest charged for so-called payday loans to military personnel at an annual rate of 36 percent.

The ordinance, introduced August 23 by Jacksonville City Council President Kevin Hyde, includes the cap and other requirements in an effort to protect low-ranking service members and other groups considered susceptible to offers of high-interest credit.

With two Navy bases, a Marine Corps command and National Guard and Reserve units, Jacksonville is a prime breeding ground for payday lenders to proliferate, industry critics say. Duval County ranks first overall in Florida for payday lending, according to the study, with 77 offices dealing in faxless payday loans.

Wisconsin Legislators Take Another Crack at Payday Loan Law

Filed under: Wisconsin — John Mitsuda at 10:49 am on Friday, August 19, 2005

Madison, WI — Lawmakers will make another attempt to beef up regulation of Wisconsin's growing payday loan industry, a state official said Thursday.

A Republican bill that would have imposed limits on payday lending was vetoed last year by Gov. Jim Doyle, who contended the legislation was too weak. But state Rep. Jean Hundertmark (R-Clintonville), chairwoman of the Assembly's Committee on Financial Institutions, said she hopes to craft a new bill that will win the governor's signature.

With that goal, Hundertmark held a hearing at the Capitol on Thursday in which invited industry and government representatives spelled out the merits and drawbacks of payday lenders. The number of no faxing payday loan agencies has grown from 64 in 1996 to 393 now.

Some of those concerned that payday lenders take advantage of needy consumers suggested the state impose a fee cap or interest-rate limit on loans. They'd also like to restrict the number of times a loan can be extended, or rolled over, by paying another fee.

Kathryn Carlson, executive assistant for the Department of Financial Institutions, said the state should consider setting up an electronic monitoring system to enforce limits on the number of loans any consumer could have at one time. She said that because payday loans, which in theory are short-term loans to tide people over until their next payday, are being rolled over for months by many customers, they need more regulation than they now get from the state.

DOD Determines Payday Loans Impact Military Readiness

Filed under: National — Roman Parchowsky at 9:51 am on Tuesday, August 16, 2005

Payday loan debt has become so widespread in military organizations that the U.S. Department of Defense determined that the astronomical rates are affecting military readiness. To counteract the adverse impact of quick cash loans, Military organizations and Florida Attorney General Charlie Crist have organized a program of low-cost loans to servicemen and women.

How low cost? Navy/Marine Corps Relief Society and counterparts serving the other branches are providing zero percent interest loans.

“Zero interest loans are a godsend and a financial lifeline for military families,�? said Crist. “Thankfully there are organizations who care about the well-being of those who give so much to our country.�?

Attorney General Crist urged the Florida Legislature to take a close look at the statutes to ensure that the men and women in uniform are being protected. Current Florida law allows an effective annual percentage rate of 390 percent. Some states have no statutory limits on payday loans.

On June 30, the Attorney General issued a consumer alert to military families advising them to avoid “predatory lenders�? and offered tips on how to avoid becoming involved with them. The alert also revealed another option for military families – the Servicemembers Civil Relief Act – which entitles personnel on active duty to more favorable loan repayment requirements.

However, these protections are available only for loans received by personnel prior to the time they are called to active duty. The zero percent interest loans expands coverage to more members of the military.

The June 30 alert also stated that certain payday loan providers were under investigation for possible illegal activity. The investigation is ongoing.

Canucks Underestimate Payday Loan Costs

Filed under: Canada — Danielle Mason at 10:27 am on Monday, August 15, 2005

Ottawa, Canada — According to a recent poll, Canadians don't know the true cost of using payday loan companies.

About 60% figured the rate was at or somewhat above credit-card interest charges, which generally range from 15-25% a year. Another 25% of respondents guessed it was less than credit-card rates.

So almost 85% of people thought interest rates were 25% or less. Of course when a $300 loan over two weeks costs $50 in fees you'd never guess the interest rate was higher. In fact, you'd probably guess the interest rate was around 20%. However, remember you have a couple weeks to pay it back, not the entire year. If you figure out the interest over the year (which is how APR is computed), that's actually 435% APR. That makes cash loans pretty darn expensive.
Looks like the Canucks are a little low on this one.

Payday Loan Protesters Assemble In Oregon

Filed under: Oregon — Roman Parchowsky at 10:18 am on Saturday, August 13, 2005

South Eugene, OR — Friday night, members of the Eugene-Springfield Solidarity Network gathered outside the Eugene Emerald's game to protest the payday loan industry. Pickets told people to be aware of the high costs associated with this type of loan.

What sparked the demonstration were the magnets that were given out to baseball fans at the EM's game. On it is a small logo for Check-Into-Cash, a loan center that helped sponsor the giveaways.

Members of the Solidarity Network say the interest rates on these types of loans are too high and that they take advantage of low-income workers who are desperate for cash. "They're not a good neighbor, they're not an asset to our community at all, we don't feel. A $300 no fax cash loan can rollover to $180 or more in fees," John Evans with the Eugene-Springfield Solidarity Network said.

South Tucson Looks Into Limiting Payday Loan Sites

Filed under: Arizona — Danielle Mason at 10:06 am on Thursday, August 11, 2005

Tucson, AZ — South Tucson is the third local jurisdiction in Tucson in the past month to decide to investigate limiting payday loan businesses.

Officials from the Southwest Center for Economic Integrity told City Council members at a meeting on Monday that payday loan businesses take advantage of the poor and elderly by imposing high interest rates on small loans.

Executive Director Karin Uhlich and Deputy Director Kelly Griffith asked the council to restrict the number of the businesses in South Tucson.

Similar requests have been made to the Pima County Board of Supervisors and the Tucson City Council. All three entities approved motions to investigate the possibility of an ordinance.

Griffith said some possibilities are to tie the number of payday loan businesses to the number of residents in the town, or by distance from each other.

South Tucson, which covers one square mile, has six payday loan businesses.

Council member Ildefonso Green estimated that was one cash loan company for every 900 residents.

"They're surviving. They're flourishing," he said. "We need to look into this."

Washington Payday Loan Firm Agrees To Pay Fines

Filed under: Washington — John Mitsuda at 4:10 pm on Wednesday, August 10, 2005

Seattle, WA — Fast Cash Loans, a local chain of payday loan stores, which was under investigation for illegal lending and collection practices has agreed to pay the state of Washington more than $50,000 in fines and legal costs. In addition, J. Blake Goldberg, chief executive and founder of the company, has personally paid $30,000 in fines.

Fast Cash Loan offices around the Puget Sound region remain open but are under new management. The quick payday advance company is under close supervision by the department, spokesman Scott Kinney said.

Last fall, Department of Financial Institutions officials filed administrative charges against Pacific Financial Holdings and four employees, including Goldberg, to revoke the company's license. The department subsequently reached a settlement with the company

The state had accused Pacific Financial Holdings of abusive debt collection practices (including posing as fraud investigators), overcharging on fees, lying about loan percentage rates and failing to keep accurate records with financial regulators.

Bid to Open Payday Loan Operation Rejected in N. Las Vegas

Filed under: Nevada — Roman Parchowsky at 12:42 pm on Monday, August 8, 2005

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.

Oregon Republicans Squash Dems’ Efforts To Regulate Payday Loans

Filed under: Oregon — Danielle Mason at 7:32 am on Friday, August 5, 2005

Salem, OR — Representative Betty Komp (D-Woodburn) fought for a vote Tuesday on a bill that would have set rules in Oregon's presently unregulated payday-loan industry, protecting consumers from extremely high interest rates and what she calls "predatory lending practices," but the majority Republicans killed the effort on a party-line vote.

Senate Bill 545, which passed the Senate earlier this session, would have set a limit on the interest and fees that a lender may charge for payday loans — a limit where none now exists. The bill would have established a maximum of $15 for every $100 borrowed for the first loan, and $10 per hundred for each renewal loan.

The bill also would have set a 31-day term for payday advances, and would have required that the borrower pay a quarter of the principal for each renewal, up to a maximum of three loans. Komp noted that the permissible annualized interest rate allowed by SB 545 is still more than 390% APR.

The requirement for payment of 25 percent of the outstanding principal before the loan can be renewed reduces the probability that a low-income borrower would fall into a "bottomless pit of debt," Komp explained.

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