john in madison

How Will Payday Lenders Be Affected by New Bill in Congress?

Are you out of your mind? You are an advocate of Payday Loans? They are such a predatory industry. I personally know of people who's lives have been crushed by these companies. A very close friend of mine, too embarased at the time to ask for help, went to a payday loan company in Illinois for a $1500 loan because she needed to pre-pay her doctor/lab for a serious bone infection (her insurance had a $500 anual deductable and a 20% co payment meaning she had to come up with $1500 up front to be treated). Every 2 weeks that they were not able to come in and pay off the loan in total the loan automatically reset and were charged the handling fee of a little over $200 (withdrawn directly from their checking account). After 10 months of paying $450 a month to reset the loan (over $4500 on a $1500 loan) they still technically owed $1500. You have the nerve to call this a "reasonably priced product"? You also fail to recognize your own statisticts. You claim these companies need to make $15 per $100 loaned, that is 15%. Truth in lending requires this 15% to be reported as a massive APR since it is 15% in 2 weeks and the loan forms have to calculate the interest as a daily rate then multiplied out in to what that daily rate would be as an anual rate. The industry seems to think that this then means they can actually get a 5000% return on the loan. Your argument only makes sense if the 15% fee is charged up front and then if the loan is not paid ON THE NEXT PAYDAY, then it either goes to collection or becomes an installment loan at the APR allowed by state law for installment loans.