Next Up on the Regulatory Chopping Block...Payday Loans

xmcp123

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Sep 20, 2007
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Payday Lenders: Save Your Money on Lobbyists | The White House

Just today, we learned that payday lenders have spent over $2 million on lobbying efforts in an attempt to exclude themselves and their practices from some of the reforms contained within this bill. This is an industry where some companies offer struggling families a loan to get through to their next paycheck, only to charge enormous interest rates over 400 percent. And they do this without any oversight for American consumers.

We cannot accept loopholes or carve outs for payday lenders. The President will not allow for these kinds of loopholes. Passing this legislation means enacting the strongest consumer financial protections ever and forcing payday lenders--just like credit card companies and banks with overdraft plans--to provide clear, understandable information so that Americans can make financial decisions that work best for them. At the end of the day, every American consumer should have the peace of mind of knowing that they are going to be treated fairly and that they’re not going to be hit with surprise terms, fees or charges by companies that extend them credit. The President is willing to have this fight, because he believes there's a clear choice in this debate, and that's whether to be on the side of the American people or on the side of the status quo.

Have fun kids. If this is getting regulated with the laws intended to hit the bailout banks, it's gonna get ugly.
 


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it's done by fees; $350 loan until payday (couple of weeks) plus a $50 fee for that 2 week period. it comes out as massive interest.

Yeah and there's not a problem with that imo. If your power is going to get shutoff and you get $300 advance for you next check most people are willing to fork out an extra $50 for it. Thats why its such a good business.

US is going to shit.
 
I have to wonder even if full disclosure is gonna turn a MAJORITY of people away. People live with high interest rates on credit cards still. Why? Because they have no choice. A quick loan of $500 gets them out of what emergency they're currently in, and they might think "I'll deal with the interest later"... after all, buy today, worry about interest/fees tomorrow, has been the backbone to this stuff forever.
 
forcing payday lenders--just like credit card companies and banks with overdraft plans--to provide clear, understandable information so that Americans can make financial decisions that work best for them

THE NERVE.
 
@turbolapp, totally offtopic but is the site in your signature reselling premium WordPress themes under some misinterpretation of the GPL? It seems like it... since they're charging $9 a month and include Woothemes...
 
I have to wonder even if full disclosure is gonna turn a MAJORITY of people away. People live with high interest rates on credit cards still. Why? Because they have no choice. A quick loan of $500 gets them out of what emergency they're currently in, and they might think "I'll deal with the interest later"... after all, buy today, worry about interest/fees tomorrow, has been the backbone to this stuff forever.


Agreed. The people who use it are people who need the cash bad in the first place. They're still going to use it.
 
But wells fargo can still offer "Direct Deposit Advances" to their customers at the rate of $50 per $500 borrowed... even if it is repaid the very next day... AND it comes out automatically upon the next direct deposit. Pretty sure the rate they get on those is way more than 400% in most cases.
 
Most of the problem in the payday loans industry revolves around how they're rolled over and how the fees pile up with rolled over loans, if I recall correctly. Payday loans have been the subject of heavy regulatory scrutiny already.

Payday loans were prohibited to be made to members of the military already ( New Law Makes Payday Loans to Military Members Illegal ), and the tons of state regulations can be found at State-by-state Payday Loan Summary - Credit.com . In some cases, loan sharking and usury laws don't quite cover payday loans, and some they do. There are tons of arguments to be made regarding the issues, but generally it seems that Congress is within its constitutional power to regulate this.

If you read the Credit.com page, you'll realize that tons of regulations are already in place, in most states (some more restrictive than others). What is blown out of proportion in most media coverage is the interest rates - The Whitehouse press release says "This is an industry where some companies offer struggling families a loan to get through to their next paycheck, only to charge enormous interest rates over 400 percent.", whereas the interest rate is only really 400+% at the APR level, not of the borrowed amount (unless constantly rolled over, which can get fucking ridiculous).

Hopefully this won't really have much of an effect over what payday leads pay me - It all depends on how strict the ruling is compared to the current state laws. Payday lending continues to thrive in markets where regulation has already been set.
 
But wells fargo can still offer "Direct Deposit Advances" to their customers at the rate of $50 per $500 borrowed... even if it is repaid the very next day... AND it comes out automatically upon the next direct deposit. Pretty sure the rate they get on those is way more than 400% in most cases.
It's all about technicalities, disclosures, and licensing. There will always be a way to make high-fee loans to low-income, low-loan-amount, high-risk customers.
 
Most of the problem in the payday loans industry revolves around how they're rolled over and how the fees pile up with rolled over loans, if I recall correctly. Payday loans have been the subject of heavy regulatory scrutiny already.

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So if you are in the miltary and need extra cash by desperate means you can't get any? Awesome..