For Tara Kudron, Mesa’s payday advance loan stores are a godsend when a small financial crisis hits and payday is still days away.

For members of Mesa’s community action group ACORN, however, the stores represent the object of numerous biblical passages warning against usury, or lending money to the poor at excessive rates.

But The Arizona Republic reports that on Thursday afternoon, at a small payday loan store in west Mesa, those biblical tables were turned as the money lenders booted the protesters out of this sanctuary to short-term cash advance lending.

The event started as another ACORN protest against payday loan stores in Mesa, which the community action group has called “loan sharks” in the past before taking the biblical route as part of an international day of action.

Thursday’s protest was designed to allow ACORN members and area ministers to read biblical passages condemning the pay day loan stores.

The ministers failed to materialize because the topic was “too political,” ACORN members said, and the protest was short-lived, lasting only a couple of minutes once the store’s manager called Mesa police to complain about ACORN members trespassing.

That the action lasted less than five minutes didn’t deter ACORN members, who want their message about the dangers of savings account payday loans to reach the ears of lawmakers as much as the customers.

“We want to draw attention particularly to the legislators because politicians running this November made promises,” said Judy Link, a Mesa ACORN member. “They said they were against payday loan practices, and we want to remind them of that.”

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AARP Utah appreciated the December 17 article about payday loans, but there is more to the story. And Laura Polacheck, Associate State Director of the organization, recently wrote in to The Salt Lake Tribune about it …

According to the Center for Responsible Lending, 99 percent of cash loans go to repeat customers and the average borrower repays a single loan eight times to the same lender. The average annual percentage rate for payday loans in Utah is 417 percent.

Payday lenders argue that an APR is an unfair comparison because these loans aren’t taken out for a year. But the cost of credit is always measured by an annual rate.

Payday advance lenders also argue that competition keeps prices fair, yet Utahns paid more than $69 million in interest charges above the initial interest rate collected. Nationally, the average payday borrower pays $800 to borrow $325.

Congress enacted legislation capping no faxing payday loans made to service members at 36 percent APR, largely because the Department of Defense reported that payday loans create such debt problems that readiness and eligibility for deployment are affected.

The military considers these bad credit payday loans predatory and called upon Congress to act. Shouldn’t we do the same for consumers in Utah?

A state agency delivered another blow to payday lenders Thursday by blocking their efforts to dodge restrictions on the high interest rates they charge on small, short-term payday cash loans.

New rules, adopted by the Department of Consumer & Business Services, will make it difficult for payday lenders to operate under a different license. Doing so would allow them to keep charging annual interest rates averaging 528 percent, said Cory Streisinger, director of the agency.

Regular and online payday advance lenders say the changes may put them out of business.

“It really is too bad because it just makes it more difficult for small lenders such as myself to move to another line of business, which is what we need to be able to do,” said Luanne Stoltz, a Portland payday store owner and vice president of the Community Financial Services Association of Oregon, which represents payday lenders.

Faxless payday loan lenders typically operate under a short-term license, charging about $20 per $100 borrowed on two-week loans for $300. Borrowers can renew the loan for an additional fee as many as three times. At the $20 rate, a borrower would pay $240 interest on a $300 loan after three rollovers.

In an April special session, the Legislature passed a law restricting charges on short-term cash advances to $10 per $100 for the initial loan and to 36 percent interest on rollovers. But those restrictions, which take effect next July, do not apply to conventional consumer licenses which are for longer-term installment loans.

About a fourth of the state’s 366 payday lending stores have applied for conventional licenses. Under a conventional license, they would have to make their loans for longer terms, but they could continue charging high interest.

The state’s new rules will require them to make 90 percent of their cash advance loans six months or longer.

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A settlement has received court approval in a class action lawsuit brought against the now defunct Internet-based payday loan company, Quik Payday Inc., and its US parent.

This class action was filed on behalf of everyone in Canada who took out a faxless payday advance from Quik Payday, from October 2, 2002 until February 11, 2005, when Quik Payday Inc. ceased carrying on business in Canada.
The claim alleges that Quik Payday, whose online payday loans were offered exclusively on the Internet, charged interest on its payday loans in excess of the maximum legal rate of 60% per year. Quick Payday charged a flat fee of $25.00 per $100.00 borrowed.

A rollover option was originally available for a further 4-18 day term, for an additional $25.00 per $100.00 borrowed. Moreover, Quick Payday charged a $20.00 late fee and interest at the purported rate of 25% per annum on overdue cash advance loans.

The claim alleges that all of these charges are “interest” as defined by the Criminal Code, and that the interest on all payday loans exceeds the maximum legal rate, and constitutes a criminal rate of interest. The Statement of Claim was issued on January 28, 2005.

The settlement calls for Quik Payday Inc. to pay all of its remaining assets into a settlement fund, which will be used to repay customers a portion of the interest and fees they paid at the time the payday loans were advanced.

Settlement funds will only be available to customers who did not default on the repayment of any of their loans with Quik Payday.

Quik Payday also agreed that it will take no collection action against any of its customers who defaulted on their payday loans.

Legislation introduced Thursday morning in the Arkansas House of Representatives would make payday advance lending with high interest rates a crime.

House Bill 1036 creates a criminal offense of making unlawful consumer loans and levies a $300 fine for each violation. The bill defines an unlawful consumer loan as one charging an effective annual interest rate greater than 17 percent, as prohibited by the Arkansas Constitution.

The measure would allow citizens to make complaints for police officials to investigate and prosecuting attorneys to take action. Lawmakers will consider the quick payday loan bill when the legislative session begins in January.

Rep. David Johnson, D-Little Rock, and Sen. Shawn Womack, R-Mountain Home, are the bill’s lead sponsors. They are joined by 14 co-sponsors in the general assembly.

Both legislators spoke at a news conference at the state Capitol in the old State Supreme Court Room.

Johnson said it’s time to put a stop to abusive cash advance lenders taking advantage of financially distressed consumers with small, high-interest loans masquerading as short-term solutions.

“In truth, it turns into a debt trap they can’t escape,” he said. “It’s not uncommon for people to incur hundreds if not thousands of dollars of debt on a small loan.”

Military payday loan effect: Womack said it is time to stop lenders from ensnaring low-income borrowers in an endless cycle of debt that creates an added barrier to entering the middle class. Reasonably priced credit should be available, even for small loans, he added.

“The goal here is to have the appropriate balance,” Womack said.

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Don’t listen to the nay-sayers. Sometimes, you need payday cash advances to get you through difficult times. Just make sure you follow certain pieces of advice as you do …

1. Be realistic about how much you need
It’s tempting to suddenly get carried away when borrowing money and decide that you’ll upgrade your holiday to business class, or double the budget for a wedding – but remember that you have to pay the money back, so be realistic.

Write a detailed plan as to how much your “project” will cost. So if it’s a holiday include the cost of flights, accommodation, spending money and insurance. Do not borrow more money than you need to with your no fax cash advance.
2. Paying off existing loans may save you money
If you already have outstanding debts, it might be more practical to pay them off before taking out another loan. Debts on a credit card, or other unsecured loans will undoubtedly be costing you a higher amount or interest, so if necessary consolidate these by transferring them to your new loan.
This will cost you less interest and increase the possibility of paying off the original online payday loan sooner.

3. Compare quotes using the Internet
Once you’ve decided how much you need to borrow, go online and research the best deals available. There are many excellent search engines and price comparison sites that will help you with this – and rates can change on a regular basis. Being armed with such information will make it easier for you to decide which fast cash loan you’d like to take out.

4. Work out realistic monthly payments
It’s great to suddenly receive a lump sum of money in your bank account, but remember that you have to pay it back on a monthly basis. So you need to carefully calculate your budget – and be realistic about what you can and can’t afford.

When working this out take into account all your monthly outgoings, including mortgage repayments, bills, credit card repayments, food shopping and other outgoings, such as pension payments or childcare. Compare these to money you receive each month, whether it’s salary, share dividends and benefits, such as a pension.

Your payday advance loan lender will then be able to tell you over what period of time you will need to pay the loan back. Typical time periods for paying back such a secured loan can run from one year, up to the full length of your mortgage – so in some cases this could be 25 years.

Do bear in mind that the longer you opt to pay back an amount, the more interest you will accrue, so in effect the more the loan will cost you in the long-run.

In Oregon, representatives of the payday loan industry argue they provide a quality service to borrowers.

For example, Luanne Stoltz owns several payday loan stores in the Portland area and serves as a media contact for the business. She describes how a customer borrows a payday cash loan.

“Typically the customer comes into establishment with a pay stub, bank statement and verification of an open checking account. The lender makes an assessment of the customer’s ability to pay back a loan, and loans an amount based on the assessment.

Assuming the loan is for $100, a typical fee would be $18 (though the range is from 15 percent to 20 percent). The customer writes the lender a check for $118, dated for their next payday. The lender would have the customer sign a promissory note, and hold the post-dated check until the due date. On the customer’s payday, the lender deposits check. It is a simple transaction.”

Industry proponents argue the faxless payday advance is a valuable resource, citing the short-term loss associated with such a loan could be low compared to bank overdraft charges or utility bill late fees, despite interest rates that rise above 500 percent when calculated by year.

Also, convenience and quick approval time are noted as advantages for consumers who look toward no faxing payday loans. Stoltz says:

“Clearly a high demand for this product exists. Last year more than 800,000 payday loans were borrowed in Oregon alone and only nine complaints were registered.”

In fact Stoltz cites: “Payday loans have the lowest complaint rate than any other lending product.”

Asked how the new Oregon law compares to regulations in other states, Stoltz said: “No other state has such severe regulations as the law passed in Oregon in 2006.”

Until the bill is effective in July 2007, Oregon remains one of seven states without an interest cap on instant payday loans.

Speculating about the future of the payday loan industry, Stoltz said the industry is faced with the inability to cover overhead costs, and she worries.

“There is no chance to reverse the legislation as it stands today … No payday loan stores will exist after July 2001. The new legislation will result in a 70 percent decrease in revenue.”

Stoltz imagines some stores may morph into mortgage and consumer lenders, but warns small operators will probably have to go out of business.

“People need to realize that [cash advance payday loan] lenders employ over 1,000 people Oregon, those people will be without jobs,” she said.

Predatory payday loans are an exploitative scam, known in the past as “usury.” So begins an editorial in The Fresno Bee.

Congress in October passed a 36% cap on interest on payday loans for military personnel (it takes effect Oct. 1, 2007). That still is an unconscionably high interest rate, but it’s a lot better than the current 300% to 700% range of the typical payday loan.

The new Congress should extend that 36% cap on faxless payday loans for all consumers.

The instant payday loan industry calls these products “emergency two-week loans,” but the Center for Responsible Lending, has a better name: “financial quicksand.” The center’s recent report said the average payday borrower pays $793 for a $325 loan.

How does that happen?

Take a typical new military recruit. He gets a two-week paycheck of $600. When the family car breaks down and needs repair, he takes out a two-week payday loan for $325, paying a fee of $52.

If his expenses for food, utilities, health care and other essentials are $500, that leaves him only $100 – not enough to repay the loan in full, as required after two weeks when his next paycheck arrives. So he takes out a new loan to pay off the old quick cash loan.

After flipping the original loan 8 times, he’s now up to $468 in interest. To pay back principal and interest, he has to come up with $793.

These are not emergency two-week cash advances, but long-term loans at exorbitant rates of interest.

That’s why Chairwoman Sheila Bair of the Federal Deposit Insurance Corp. says that the lending market has become divided between two groups, those who get “virtually cost-free basic financial services” and those who “pay high amounts.” Lower-income people who have no financial cushion pay exorbitant fees and interest on loans, while those of higher income pay very little.

The payday advance industry worries that the cap passed by Congress for the military could serve as a precedent. They ought to worry. These exorbitant-rate loans are unconscionable for all consumers. A 36% cap should apply to all.

The Free Lance Star has something to say about that jingle-jangle you hear. It’s the sound of cash registers merrily ringing their way through the Christmas season.

Having bought into the idea that love is best expressed materially, it’s an easy time of year for some shoppers to overspend. That’s why it’s even sadder that a Virginia House of Delegates committee refused to lower the boom on payday cash advance lenders earlier this month.

Come January, Christmas cheer will become winter fear for many.

Consumer protection laws are meant to shield the unwary from the unknown. For many, a no fax payday loan seems like a quick fix to a short-term problem. All too often, however, that quick fix becomes a link in a chain that leads to bankruptcy.

Typically, a consumer turns to a payday lender for small cash - less than $500. The loan is due at their next paycheck, generally two weeks away. The lender charges a fee of $15 per $100 borrowed, plus interest. For a two-week cash loan, that amounts to about 390 percent. If a borrower gets paid weekly, the annualized rate is 780 percent.

Many times, borrowers find their circumstances no better in the next pay period than they were in the last. They can’t pay off the loan and simply roll it over; soon, they find themselves mired in a quicksand of debt.

Last year, according to the State Corporation Commission, 445,891 Virginians took out 3,372,103 bad credit payday loans, totaling $1.12 billion. The Center for Responsible Lending has found that 60 percent of these loans go to those who take out 12 or more per year.

Translation: Some folks get hooked on payday loans.

Sadly, many payday lenders are clustered around military bases. A skyrocketing number of military personnel have had their security clearances yanked because of their debt, making them ineligible for deployment overseas. Officials attribute the problem to predatory lending and lack of financial wisdom among the troops.

In response, the FY 2007 Military Authorization Act has a provision prohibiting charging military members more than 36 percent interest.

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Across the Atlantc, hugely expensive credit deals are being pushed by companies capitalizing on the need of cash-strapped households to find money quickly in the run-up to Christmas.

Provident Financial, the credit-pusher giant that specializes in lending to those on low incomes and those without bank accounts, has blitzed tens of thousands of homes with junk mail cash advance loan offers.

The typical rate of interest charged is 177%, though for some borrowers it could be more than 300%.

“If you’ve realized you need extra cash for Christmas, don’t worry,” gushes Provident’s offer. “Don’t miss out on the Christmas you want!”

The mailings contain its much-loved gimmick of a fake check made out to the addressee, with the words: Turn this into CASH - NOW! And you thought American payday loan companies were out of hand.

Other firms are offering even dearer credit, with the APR running into thousands or, unbelievably, tens of thousands.

Paydayuk.co.uk, for instance, charges borrowers 50 pounds for a loan of 200 pounds, which for short-term borrowing is an APR of more than 22,600%.

Another deal is from uncle-buck.co.uk, which charges borrowers 75 pounds for a one month payday advance loan of 250 pounds - making a total repayable of 325 pounds. This works out at an APR of 2,339.3%.

Several other online companies, such as yesloansuk.com and payday-express.co.uk, offer similar deals. They target those who cannot borrow elsewhere with supposed deals on online payday loans.

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