Hold Up! Financial Group Questions Military Payday Loan Report
By J.J. CameronPayday Loan Writer
In the last few weeks, the Pentagon has stepped up its critiques of military payday loans. Recently, the Department of Defense issues a report to Congress on the supposed negative impact of such cash advances.
However, a leading regular and faxless payday loan lending industry organization takes exception to the report.
The report “is nothing but a re-hash of flawed data, biased analysis and anti-business philosophy pushed by fringe activists,” says a press release issued Thursday by the Community Financial Services Association of America, a national trade association representing payday advance lenders.
“Fringe activists” worked so closely with the Pentagon, CFSA claims, that one group posted the report on its Web site before the report went to Congress.
According to the Pentagon report, between 1999 and 2005, the number of quick payday loan shops in the country nearly tripled, going from 8,000 to 23,000.
“The allegation that payday lenders target members of the military is simply false,” said Darrin Andersen, president of CFSA. “In fact, their own report shows that less than 1.3 percent of total industry revenue comes from military customers.”
It's something to consider.
Andersen, noting that CFSA represents “responsible payday lenders,” said he condemned the abusive practices of some payday advance companies “and any other type of lender who mistreats their customers, especially service men and women who defend our country.”
CFSA’s “Military Best Practices” prohibits garnishment of military wages or salaries, and engaging the military chain of command to collect payment, among other things.
If the interest rate on no fax needed payday loans were capped at 36 percent, as the Pentagon report recommended, it would be “so restrictive that it would entirely prohibit the industry’s ability to make loans to military personnel,” CFSA said.
There are more alternatives to payday loans for military personnel and their families than ever before. Military-affiliated banks and credit unions are increasingly offering more short-term, low-cost loans. For example, using the new Pay & Save Loan program at VyStar Credit Union in Jacksonville, Fla., service members can borrow up to $750 for six months at an interest rate of 14 percent.
“We’re a cooperative. We’re not here to make a lot of money. We feel we can break even, and make a little money at 14 percent, and help our members. That’s the reason credit unions were formed, and we want to follow that mission of helping people who need this,” said Rich Alfirevic, executive vice president and chief operating officer at VyStar.
The debate over military cash loans certainly won't end any time soon. We'll keep you informed as news rolls in.
