Payday Loan Lenders Target African-Americans, Military Personnel
By J.J. CameronPayday Loan Writer
Are payday loans good or bad for consumers? That's a question often debated, but certain facts can't be questioned regarding these resources.
For example, online payday loan lenders often target African Americans and U.S. military personnel. A recent analysis by the University of Washington and the Seattle Post-Intelligencer found that twice as many payday loan lenders are located in African American communities in Washington, regardless of the income levels of people in those neighborhoods.
Furthermore, numerous government reports have also found a high concentration of military payday loan lending stores close to armed forces bases. The problem arises when these borrowers can’t repay the loan when it comes due, so instead they get another loan to pay off the first. For borrowers with multiple loans, payday lending functions as chronic debt instead of helpful credit.
The Center for Responsible Lending estimates that payday adance lending costs five million Americans $3.4 billion annually. In 2004, this industry made over $164 million from fees charged to consumers in Washington alone.
Despite pressures - and these facts - payday loan bills have been shot down in the state. Corruption is an issue. The industry gave close to $200,000 to state PACs and candidates in 2004, while two former state regulators are now lobbyists on behalf of the business.
Consumer advocacy groups, including the Statewide Poverty Action Network, will be working to counter that influence in the 2007 legislative session. They have their work cut out for them, as protections hoping to be passed include minimum repayment periods on pay day loans, a cap on APR and the prohibition of mandatory arbitration to allow consumers recourse in a dispute.
