Monday, September 19, 2005

Payday loans

Has your FEMA debit card run out? Don't have your FEMA voucher yet? Why not try a payday loan? I can see this scenario being repeated over and over in the near future. The Arizona Republic recently looked at the payday loan situation in it state (see the online article here.) Pluses? Fast access to cash, cash that would otherwise be unavailable through traditional sources such as banks and mortgage companies. Minuses? Annual Percentage Rates (APRs) of up to 460 percent. Some would think that type of obscenely high APR would invite greater scrutiny from local or state government. Obviously, payday lobbyists don't think so. From CounselorLibrary.Com:
The Arizona Community Financial Services Association, the payday lending industry trade group, said it opposes any restriction that tries to distinguish payday loan offices from any other retailer. "We should be evaluated in the same context as any auto-parts or furniture store. To discriminate against a payday lender requires a governmental finding that the health, safety and welfare of the community are at risk in the absence of the additional regulation," said Lee Miller, an attorney for the association. "I haven't heard any compelling argument that a payday lending store puts the community's health, safety or welfare at risk."
Last I heard, Advance Auto Parts and Broyhill weren't charging consumers triple-digit interest. We'll see if governments treat these operations in the future as retailers or lenders, which is what they truly are.


Anonymous Patrick said...

Same problem with furniture and TV rental places - sky-high interest rates and exorbitant conditions in their contracts.

September 23, 2005 8:12 PM  
Anonymous Anonymous said...

The reason that the payday places charge such a high rate is becuase they are paying for the risk. It isn't like they are trying to flease there customers, it is becuase the checks that are cashed there sometimes bounce - such a folks that work in contracting situations - high risk employers. This explains why you would never see a payday place right next to a reputable, steady employer. Must of those people probably have direct deposit - that company isn't going anywhere. *Cough* *Cough* Upland.

Furniture and other retail places do it to make sure that they receive there money in a timely manner. It is the same as a vendor giving a discount to a distributor for paying early on a bill, but in this form the store either gets there money sooner, or you, the dumb ass, will pay them for procrastinating your payments and paying the interest.

Oh, by the way, for most places, you pay the interest that acrued from the date of purchase, not from the date the interest supposedly kicks in.


September 23, 2005 9:00 PM  
Anonymous Patrick said...

But isn't there a difference between paying for the risk and stretching the limit of the law? I mean, there's a reason why your customers pay 5.99% on some credit cards if they have excellent credit and 24.99% if they have shitty credit. But 300-400%? That just means your industry has friends in high places.

September 25, 2005 8:42 PM  

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