Newspaper Column Praises Military Payday Loan Regulations
By Paul RizzoPayday Loan Writer
Eileen Ambrose, a reported for The Baltimore Sun, recently wrote an opinion piece for The Morning Call. In it, she prasied recently payday loan restrictions to the military. Here it is, paraphrased:
Two new laws seek to protect members of the military from being taken advantage of financially on the home front.
One aims to prevent agents and brokers from using misleading tactics to sell high-priced insurance and investments to troops. The other caps the annual interest rate that regular and faxless payday advance lenders can charge service members for advances on their paychecks.
The help is needed. Thousands of troops are so far in debt that they are losing their security clearances and, as a result, are unable to serve overseas.
Regulators say many new service members are financially inexperienced, making them vulnerable to sales pitches from those selling inappropriate or costly products. A no credit check payday loan is certainly an example of this.
”They are coming in many times right after high school. They are young and many times they are young marrieds. Chances are the military is their first real paycheck,” said Joseph Borg, president of the North American Securities Administrators Association. ”Anyone at that age, whether in the military or not, is a novice when it comes to financial education.”
Concern about troops’ finances has been growing in the military and Congress. A 2004 investigation by The New York Times that found young soldiers were being sold confusing, unsuitable and expensive products prompted the recent payday cash advance legislation.
A provision of the Military Personnel Financial Services Protection Act signed by the president this month tackles such payday loan lending, where workers get an advance on their paycheck through a short-term loan.
Payday lenders often have offices outside military bases. Fees charged often come out to an annual percentage rate of several hundred percent.
The provision caps the annual interest rate a provider of bad credit payday loans could charge a service member at 36 percent. This will take effect by October 2007.
Ludwick said the new laws will go a long way toward protecting troops because there will be more supervision of people soliciting on bases. Also, the caps on cash loans will reduce ”the likelihood that many service members will get in over their heads.”
