As the popularity of faxless payday loans increases in South Carolina, more and more consumer groups are taking action against these cash advances.

For example, Wednesday morning graduate students from the University of South Carolina met at the State House to persuade their representatives to pass new legislation restricting payday loans. The social work students say the high interest loans target those who lenders know will have a hard time repaying the loans.

USC grad student Tiffany Harris said: "They are just a debt trap for, specifically, low income families but also for military families and the elderly … a lot of times they get these loans because of a crisis, a bill needs to be paid, they can't afford to pay it. So they go out and get a very high interest two week loan, but chances are if they can't pay it now, they won't be able to in two weeks."

The students are asking law makers to, among other changes, restrict instant payday loans to one at a time per person. We'll keep you updated on their progress.

It looks like Governor Ted Kulongoski may be listening to those who want to see regulations on payday loans and other industries that prey on consumers.
The governor said he'll propose a bill next year to limit charges by Oregon check-cashing services to 3 percent or $5, whichever is greater. Critics say check cashers' fees are unreasonably high and hit people who can least afford them, generally low-income residents without bank accounts.

"Charging working Oregonians a fee equal to 8 percent of their take-home pay just to cash paychecks is simply unacceptable," the governor said Tuesday in a statement for closing ceremonies of the state employees' food drive.

Luanna Stoltz, owner of a Portland cash advance company, said she was unsure how the governor's proposal would affect her limited check-cashing business. She cashed checks more as a service than moneymaker, she said. The Oregonian was unable to reach several other owners of check-cashing or payday loan stores.

Most activists and legislators concerned about financial exploitation of low-income residents are focused on regulating payday loan lenders, which charge high interest for short-term paycheck advances. Legislative leaders say they may try next week in the special session to adopt a bill to tighten controls over payday advance lenders. (more…)

What do you do if you've rolled over your payday loan and just find yourself fighting an uphill battle? Ruby and Ronald Stoker of Junction City, Oregon, got into trouble when they took out a payday loan for $700, according to the Oregon Student Public Interest Research Group, then bounced a check for the amount plus the $140 fee.

Overdraft fees, a lot of stress, and one rollover later, the couple was left with two options by the fast cash advance company:

1. Pay the full amount owed.
2. Pay another $140 fee to roll over the payday loan for another two weeks — and, in the process, retain their status as a "preferred customer."

This is where the real problem hit. The Stokers rolled over the cash loan and, when it came due again, rolled it over a third time. In order to keep up with the escalating fees they had been sucked in by, they took out two additional payday loans and a car title loan — for a debt that ultimately exceeded $2,000. Luckily, they were able to find help.A local credit union, which helped them refinance their repayment, got them out of this mess, but the lesson is clear. If you are in a position where a payday loan is the best option you've got, be sure you can make the payment date. Rolling them over is how you get yourself into serious trouble.

The point of instant payday loans is to pay off debt, not dig yourself an even deeper hole.

You’ve read about military payday loans and why they’re often considered detriments to those hoping to benefit from them. The Navy has recently launched a website echoing this sentiment.

NavyMoney.com is meant to offer advice to members of the United States Navy. It’s an alternative to the Navy Federal Credit Union. The site is aimed at giving financial advice - do you apply for a cash loan? What are the drawbacks? - to those entering the military.

Information included in the Website includes articles and links to help sailors establish and maintain good credit while enlisted. The service offers advice on:

• Building credit
• Establishing loans for property and vehicle purchases
• Repairing bad credit
• Qualifying for credit and educational opportunities for military personnel

“I remember the hard times I had coming up through the ranks while trying to live and have a little fun on my salary”, says Jared Croslow, owner of NavyMoney.com. “If I can help other sailors by providing the resources to make it easier, then I have succeeded in my goal.”

The site also provides many valuable resources pertaining to credit. It includes information on the importance of diversifying credit from the Navy Federal Credit Union.

There is also insight on automobile and motorcycle loans, VA loans, credit card debt and alternatives to payday loans. The suggestions offered in the site will help sailors apply for the loans and credit with the highest potential for approval.

Efforts to regulate the growing Wisconsin payday loan industry are going nowhere, and a new proposal in the State Legislature isn’t likely to do anything to break the impasse, reports the Milwaukee Journal-Sentinel.

A State Senate bill, which would cap interest on instant payday loans at 5 percent — instead of the 20 percent typically charged on an initial loan - simply would drive the lenders out of business, according to a payday industry spokeswoman. But that would be just fine with state Sen. Glenn Grothman, a Republican who sponsored the bill.

“They charge outrageous interest rates and they make poor people poorer,” Grothman said.

Interestingly, it looks like that kind of contempt toward payday loan companies by consumer advocates is exactly what’s making a compromise impossible. As a result, Wisconsin is one of the few states that doesn’t regulate payday loans, said state Rep. Jean Hundertmark, a Republican who, last summer, held a public hearing on the issue.

“The industry was willing to make some concessions, the others were not,” Hundertmark said.

Meanwhile, payday loans continue to grow in Wisconsin.

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A recent editorial in The Oregonian has a message for the state legislature: it is possible to focus on multiple issues at once. While Governor Ted Kulongoski is urging the Legislature to “limit its attention” in an April 20 special session to allocating money for human services and schools, one writer doesn’t understand why it can’t also focus on the issue of payday loan regulations.

Nearly all other states have adopted laws preventing the payday loan industry from preying on vulnerable poor people with short-term payday loans and penalties that combine to create interest rates of more than 500 percent.

But the Oregon Legislature whiffed on this issuesin its last regular session. House Republicans stopped the payday loan legislation. Now groups are gathering petition signatures to put payday loan initiatives on the November ballot.

This should not be that hard. Some Republicans don’t like the restrictions in the payday loan initiative, but polls suggest an overwhelming percentage of Oregonians do.

Oregonians are right. The runaway payday loan industry must be reined in.

How many more people are going to walk out of payday lenders with payday advances they will never pay off? Whatever happens, Oregonians are not going to look back to April 20 and wish that legislators had limited their attention.

Perhaps more than anywhere else in the nation, South Carolina has seen an influx in the popularity of payday loans. While some struggling individuals welcome the cash advances, various consumer advocates are not as sure.

“There’s nobody else out there willing to lend these individuals with [bad credit] money,” said credit counselor Schrendria Robinson.

Payday loans look like the perfect solution, but credit counselors say the quick-fix cash causes problems - now the State House is taking on the issue.

Since Georgia and North Carolina banned the quick loan companies, many of them have moved to South Carolina. Since 2000 the number of these stores have doubled, according to a recent study by AARP, and credit counselors say so has their case load. Robinson’s agency helps at least 50 people a week.

That’s why counselors support a new law legislators are considering.

The law would limit the number of payday loans a person could possess at a time - to only one. Credit counselors say it would help put an end to what has become a vicious cycleof debt

South Carolina lets payday loan lenders charge 15 cents for every $1 borrowed, with the money due in some cases in as little as two weeks. That’s an annual interest rate of nearly 400 percent.

“Unless something is done quickly, we’re just going to see more people in our state filing for bankruptcy and more people getting into worse financial trouble,” said Robinson.

The Arkansas legislature may not be prepared to fully eliminate payday loans from the state yet, but Republican gubernatorial candidate Asa Hutchinson said last week that he would lead efforts to repeal Arkansas’ payday lending law if elected the state chief executive.

In 1999, the Check Cashiers Act opened the door for predatory payday loan lending practices in Arkansas to grow, Hutchinson told senior citizens in a speech to a local AARP group.

“It’s past time for somebody to step up and do away with this exploitative practice,” he said. “Predatory payday lending is a trap for the unwary that becomes a financial ball and chain around the necks of our working families and our most vulnerable citizens.”

The AARP and other payday loan lending opponents say current law allows payday advance companies to circumvent the state constitution’s 17 percent interest limit and charge more than 400 percent interest on loans, costing the average payday loan borrower $800 for a $350 loan.

Industry supporters counter by saying that payday lending provides banking alternatives for people who have little access to traditional lending institutions.

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Cash America International, Inc., announced expected earnings of more than its initial estimates, according to a news release. In the first quarter of 2006, the company experienced higher levels of retail sales and stronger profit margins, due in large part lower loan loss rates from its cash advance portfolio than it had anticipated.

According to the news release, the company now expects first quarter earnings of more than it previously announced. Its management anticipates earnings per share of between 49 and 50 cents per share for the first quarter of 2006, a significant rise from the 39 cents per share garnered in the first quarter of 2005. Previous projections for growth in this financial quarter where between 43 and 45 cents per share.

Cash America International will disclose its full financial results for the first quarter (which ended March 31, 2006), on April 27. A revised outlook for the remainder of the year will then be issued. The financial services firm has 886 total locations in the united states. One of the largest providers of secured loans to individuals, commonly referred to as payday loans, in 21 states, the agency uses brand names such as Cash America Pawn, Cash America Payday Advance, Mr. Payroll and Cashland.

Recent allegations against the Payday Loan Store of Illinois Inc. are merely the latest step in an effort by the state to reform short-term payday loan lending practices.

At the center of this effort is the Payday Loan Reform Act, passed last year to regulate payday loans with terms of 120 days or fewer. The new law is meant to protect consumers who enter into such long-term contracts with cash advance companies and lenders.

However, according to Dean Martinez, secretary of the Illinois Department of Financial and Professional Regulation, some vendors are finding a way around the new law, which provides many restrictions for short-term payday loans, including capping finance charges at $15.50 per $100.

“The Payday Loan Reform Act refers to loans that last 120 days or less,” he said. “So one could argue that anything over 120 days is not under the PLRA. We’re trying to rectify that.”

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