Military Payday Loans Especially Prevalent in California
By J.J. CameronPayday Loan Writer
Simply put: members of the U.S. military are under financial attack.
The issue of military payday loans is growing especially strong in California, as the battle to quiet abusive lending programs is having an impact on the ability of armed forces to do their jobs.
"Predatory lending practices represent a real and growing threat to the military readiness of our Navy men and women stationed in California," said Rear Adm. Len Hering, who represents all Navy bases in California as commander for the Navy Region Southwest. "The connection between military readiness at this time when our nation is at war and the marketing of payday loans outside of our gates is well-established."
According to a report from the California Reinvestment Coalition, the highest concentration of instant payday loan lenders in the state can be found near Camp Pendleton. It claims 70 offices are located near the Marine base where more than 60,000 military and civilian personnel work. The situation is just as bad outside of the Naval Station San Diego.
The Center for Responsible Lending claims such military payday loans are designed to trap borrowers. On the surface these cash advances seem innocent; but, when you dig little deeper, things get pretty ugly.
The typical two-week payday loan has an annual percentage rate of 400 percent.
"Given that they are living paycheck-to-paycheck, it is not surprising that most borrowers are unable to pay the loan back in full on its first due date," said Charles Lowery of the Center. "Short of cash, and faced with either paying $300 to retire the loan, or paying $45 to put off the hardship and avoid default for another pay period, borrowers will typically need to pay the $45 fee to float the loan."
California law does ban rollovers, but payday advance lenders have found loopholes that allow the abuse to continue.
Fast payday loan lenders take advantage of the fact that California has some of the weakest laws in the country, said Major Gen. Michael Lehnert, commanding general of Marine Corps Installations West.
"Here in San Diego we regularly see rates of 460 percent (over the course of a year), and I have seen rates as high as 920 percent being charged legally against our service members. Ultimately, because we expect our Marines to be financially responsible, their ability to re-enlist, compete for good jobs and keep a security clearance is affected," he said.
Armed forced leaders are supporting legislation pending in Sacramento that would cap the interest rate on any military payday loan at 36 percent.
