Payday Loan Times

The Fayetteville Observer is reporting that people needing quick cash loans now have an alternative to getting money for emergencies without paying steep, and often endless, interest rates.

Fort Bragg Federal Credit Union, Pentagon Federal Credit Union Foundation and the State Employees Credit Union are offering short-term loans of up to $500 for those who need money between paychecks. Before, these borrowers used would turn to cash advance loans for an advance on their next paycheck.

Those payday loans were often coupled with interest rates that were twice as expensive as a credit card late fee, according to the Center for Responsible Lending in Durham. Payday loan companies stopped operating in March after years of pressure from the state attorney general.

Now, military members, Defense Department personnel, state employees and their spouses can get emergency loans with either zero or minimal interest rates. The ARK loans - which stands for Asset Recover Kit - require a $6 one-time fee at Fort Bragg Federal and Pentagon Federal. If the program is used more than once, the borrower must attend consumer counseling.

“I don’t think there is any other low-cost alternative out there,” said David Elliott, chief executive officer of the Fort Bragg Federal Credit Union.

No delinquencies on these loans

So far, borrowers at military credit unions have not had any delinquencies in paying back the loans, and the counseling is going so well that Pentagon Federal has a full-time counselor at its Skibo Road branch. (Read on …)

The military payday loan crusade continues to garner support from both sides.

In Sacramento today, the Assembly easily passed legislation that aims to protect members of the military and reservists from overzealous collectors of online payday loans.

Carried by Assemblyman Ted Lieu (D-El Segundo) the legislation prohibits payday loan companies from seeking to garnish wages or from contacting superior officers. It also would require payday loan companies to honor repayment agreements negotiated through credit counselors.

The measure also would allow members of the service, reservists or spouses to defer payment for 180 days on their faxless payday loans from the date of deployment. Members of the National Guard also are included. Lieu, a Democrat who served in the Air Force, said the standards in the legislation would "clearly protect our military from being taken advantage of by payday loan companies and having their credit damaged beyond repair."

The measure "is one way we can ease the financial struggles of those who serve our nation and help sustain their morale by providing financial relief during deployments," he said.

Did the payday loan industry pay for another trip for New Mexico Governor Bill Richardson that the media hasn't reported yet?

That's the assertion of yesterday's online edition of the New Mexican. According to the most recent Democratic Governors Association contribution / expenditure report, the nation's largest payday loan company made a travel contribution valued at $2,352 on February 5.

The day after Advance America paid the sum, Richardson — the chairman of the DGA — gave the keynote address at the Emergency Issues Conference at North Carolina State University in Raleigh, N.C. From there, Richardson traveled to Washington for a news conference with Michigan Gov. Jennifer Granholm to discuss the effects of President Bush's budget proposals on their respective states.

At the time, Richardson's office said the DGA was paying for Richardson's trip. Yet the DGA's report, which is filed with the IRS, didn't list any other travel expenses or contributions for those days. Three weeks prior, the Albuquerque Journal reported that Advance America made at least six travel contributions to the DGA within the last year, for almost $17,000.

For what it's worth, some of previous contribution dates coincide with Richardson travel. In early February, the State Legislature was debating a bill that some critics — including consumer advocate and Attorney General Patricia Madrid — criticized as being too friendly to the companies that offer instant payday loans. The bill died on the Senate floor as the result of a threatened filibuster.

Advance America, which operates at least 10 cash loan offices in New Mexico, gave another $10,000 to the Democratic Governors Association on February 24, bringing its total for the year so far to $12,352. It remains to be seen whether there was any impropriety on Richardson's part, but these developments in the New Mexico payday loan industry are certainly worth following.

Nick Auchincloss is the new Head of Corporate Development at My Payday Loan. The company also operates three other payday loan brands in addition:

1. Month End Money
2. PayDay UK
3. Payday Store

Auchincloss has joined the team to explore new avenues and business opportunities for the company within the short term loan and financial markets. A former Sales Manager at a leading UK loan company, he has also consulted on a number of projects within the payday loan industry itself.

Some of the new products Auchincloss has been working on since joining the business are already in the testing and pilot phases and will soon be available to the consumer. "When developing new products, it's important to ask, 'Is it something I would buy?", and a few things have come to mind that offer our customers an extension of the [payday loan online] service they already enjoy," he said.

While some sites and/or groups are against the use of military payday loans, a recent study supports the use of these types of cash advances.

The Consumer Credit Research Foundation, whose work has focused on the payday loan lending industry, argues that military personnel, do not have strong enough credit backgrounds to access prime credit alternatives.

Therefore, they need full access to short-term credit products, including military payday loans, pawn loans and title loans against their personal automobiles.

The report comes as Congress considers legislation to protect soldiers from abusive and misleading insurance sales practices and to keep personnel from falling into debt that expands over time. The Senate Banking Committee is now drafting a bill concerning payday advances, likely to be debated in June.

(Read on …)

Payday advances made by short-term lending companies before a state law was passed in 2001 to regulate the industry were illegal, the Florida Supreme Court ruled Thursday.

The case involved businesses that, for a fee, issue a cash advance (also known as a payday loan) exchange for post-dated checks that will not be cashed until a later date.

The issue at hand is the fees involved with the service, which exceeded the 18 percent legal limit and the 45 percent level that is considered criminal, according to Christopher Casper, a Tampa lawyer who has filed several lawsuits that are on hold pending the ruling.

"We are going to make every effort to prosecute these claims through class action. There's a lot of victims out there. We're talking about hundreds of thousands of people," Casper said.

(Read on …)

How do payday loan antagonists get their points across? Use inflatable sharks, of course.

Shareholders arriving for the annual Wells Fargo meeting in San Franciso were greeted by dozens of these novelties, meant to symbolize the discontent of protestors over the company's predatory payday advance lending. The demontration was led by communitry group, ACORN. 

After the demonstration, 18 of the protestors entered the meeting using proxies donated by Responsible Wealth, a group of socially conscience investors. They presented a resolution in the meeting asking Wells Fargo to explain why the company charges African-American and Latino borrowers higher interest rates on cash loans than whites.

For more than three years ACORN has been waging a national campaign against Wells Fargo's predatory mortgage lending, which the group contends has especially harmed communities of color. In California, according to ACORN, African-Americans who get a home loan from Wells Fargo are six times more likely than whites to get charged a high rate and Latinos are almost four times more likely than whites to get a high rate.

Wells Fargo, moreover, provides loans to some of the largest payday loan lenders, check cashers, and pawnshops in the country; companies such as:

• Money Mart
• ACE Cash Express
• Advance America
• Cash America

After watching payday loan outlets proliferate rapidly across Canada with little or no regulation, the federal government appears poised to hand over control of the controversial short-term lending industry to the provinces.

Banks, insurance companies, utilities, credit unions are all bound by an article in the Criminal Code that prevents them from charging APRs of more than 60 percent. The payday loan industry, on the other hand, has floated under the radar for years at times charging rates that hover in the triple digits when various fees and charges are factored in.

Before the country's most recent election was called, Canadian government officials were about to introduce legislation that would allow companies offering payday advances to skirt the 60 percent limit as long as provinces came up with their own regulations. Justice Minister Vic Toews now says he's also favorable to the plan.

"That is a mechanism that I think has some merit and I will very seriously consider that," Toews said.

(Read on …)

Sheri Howard was the focus of a story in The Journal Gazette last week. How come? Because her desk sits in the center of the jewelry counter at Broadway Loan, a pawnshop at Broadway and Taylor Street.

She pointed to a calendar and explained the financial realities that reign over much of America. Because some people receive their paycheck on the first of the month, they run out of money before the calendar’s page is turned. That’s why the pawnshop - and payday cash advances - are often the only source of money that can tide them over.

This is especially the case with the current increase in gas prices.

“Every day, day in and day out, a dozen times a day,” people come in, looking to swap something for money for gas, said Lucas Hunter, who works at the shop.

A nail gun, Hunter said, will get you a loan for $30 to $70, depending on the make and the quality. When the worker finishes the job and gets paid, he’ll come back and reclaim the tool. Of course, not everyone has valuable tools to hock.

One woman came in with a few items, and the shop told her they could give her only $1.50. The woman took it, saying, “Well, that’s nearly a gallon of gas.”

This is an individual who may have to seek out an online payday loan in order to make full payments on impending bills.

With rumors flying that gas prices may hit $4 a gallon this week, people will continue to pawn items and consider payday loans. In these trying financial times, measures need to be taken in order to avoid significant debt. Or simply fill up your car.

Opponents of payday loan lending in Arkansas say the Check Cashers Act of 1999 allows predatory practices that circumvent the state constitution's 17 percent interest limit. Many of these operators can turn a small payday advance into a pretty cushy windfall by forcing folk living from paycheck to paycheck to rollover a short-term loan several times.

Some charge exorbitant interest on payday loans, costing the average cash loan borrower in Arkansas $800 for a $350 handout, according to Arkansans Against Abusive Payday Lending. But many lawmakers at the state Capitol and in Washington, D.C., have chosen to ignore the similar usurious features of both these modern banking products.

Rep. Jay Martin, D-Little Rock, and Sen. Tim Wooldridge, D-Paragould, both candidates for lieutenant governor, are pushing draft for the 2007 regular session that would enforce a provision in the state constitution making any usurious transaction illegal, largely focused on payday loans. However, a key provision in their proposal exempts banks, trust companies, credit unions and savings and loans from the enforcement requirements of the law.

(Read on …)