More Views on Military Payday Advances
By J.J. CameronPayday Loan Writer
A local ABC affiliate in California recently ran a piece on the military payday loan debate that's swept up Congress. Here's a summation of it:
Thomas Day, a financial counselor at Travis Air Force Base referred to fees on cash loans as "loan sharking." He shared the story of senior airman, Joshua Hoyle, who got behind on his rent and car payment, choosing to see what a payday advance lender could to to help.
After all, in just two weeks, he could pay back the cash borrowed and be in the clear, right? But there's just one problem with that line of thinking, Hoyle said:
"If you don't have the money there to begin with, where is it going to come from?"
Nowhere. That's why most clients roll over their payday advance loans andd the interest rates throw them into further debt.
"Because of bad credit, they're either unable to get a security clearance or they're having the security clearance pulled," said Day of the consequences facing those with such financial difficulties.
Without security clearance, soldier can't be deployed to the battlefield, which is why Paul Leonard of the Center for Responsible Lending takes such issue with this practice: "We are at a time of war and payday lending is threatening the military readiness of our troops."
As the House debates the recently proposed interest rate cap on military bad credit payday loan lenders, Lindsey Mdsker of Community Financial Services Association had the following to say:
"At 36-percent rate cap, what that means is per $100 that our lenders lend, they can only charge $1.38. With $1.38, they can't afford to pay their own employees or any overhead costs."
So there are two sides to the debate.
Critics accuse the payday lenders of taking advantage of military personnel who are often young and financially inexperienced.
A map shows the number of quick cash loan lenders and check cashers clustered around Travis Air Force Base - more than the number of McDonald's and Burger Kings combined.
But Medsker raises a question to the critics: what's the alternative?
"The critics of this industry are very quick to criticize payday advances, but they're very slow to offer realistic alternatives for people."
The military says it does have an alternative, easy to qualify for interest-free loans. That's what Hoyle received after he turned down loans from payday lenders.
Such interest-free loans are available on most military bases from the Military Aid Society. Meanwhile, the proposed interest rate cap is now being debated in a House Senate conference committee and we'll keep you updated on the progress.
