New Study Supports Military Payday Loan Access
By J.J. CameronPayday Loan Writer
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.
Legislation already approved by the U.S. House of Representatives would restrict lenders' loan collection practices and require mandatory disclosures to borrowers. Another measure proposed, but not advanced in the House, would cap the annual percentage rate (APR) on payday loans made to military personnel at 36 percent - a move that could drive the payday lending industry out of business near bases.
The Consumer Credit Research Foundation study says soldiers' credit options should not be limited. Instead, military personnel should be educated about their options and insiders should be open about cash loan terms, the authors stated:
"Rather than try and figure out where do I put the roadblocks to prevent them from making mistakes, let's arm them with the intelligence they need, the skills that they need and, from the industry, let's demand the information they need to make smart decisions," said Charles Cushman, one of the report's authors and associate dean of the George Washington University's Graduate School of Political Management.
Other financial services providers say soldiers have access to credit with more favorable terms.
"Unfortunately, there are those who prey on the troops," said Fred Becker, president of the National Association of Federal Credit Unions.
Becker said payday loan lenders operating near bases thrive by getting military personnel to take out payday loans and then allowing them to keep rolling the debt over, creating a cycle that young soldiers and sailors have difficulty beating.
