Another Virginia Payday Loan Take: Ban All Lenders
By Paul RizzoPayday Loan Writer
Fred Waddell is an associate professor emeritus at Auburn University. He recently wrote an opinion piece for The Roanoke Times …
Do you remember the stories about coal miners and sharecroppers who were slaves to company-owned stores? These impoverished workers labored from sunup to sundown. When it came time to feed their families, the only place they could buy food and other necessities was the company-owned store, which charged prices so high people had nothing left over.
Company stores were also the only ones that would let the workers buy on credit. So, each payday, after paying what they already owed and buying food on credit till the next payday, they remained penniless. They were truly chained, like slaves, to the company store.
We see this today, desperate Virginians chained, like slaves, to predatory easy payday loan lenders.
Consumer protection groups such as the Center for Responsible Lending in Durham, N.C., and the Consumer Federation of America in Washington, D.C., refer to payday loan practices as predatory lending - and payday cash advance lenders are indeed predators.
The Center for Responsible Lending estimates that payday loan fees cost U.S. families at least $3.4 billion a year, with the average borrower paying $800 for a $325 loan.
Research from the University of North Carolina’s Kenan Institute, Ohio State University’s law school and various state agencies and consumer groups across the nation show that these businesses purposely structure their contracts so consumers have a hard time repaying their initial debts, with outrageous interest rates, loan periods restricted to two weeks and refusal to accept partial payments on the principal.
Consumers who can’t pay off the entire debt at once must keep refinancing their faxless payday loans until they can.
State regulators in Illinois, Indiana, Washington and Wisconsin looked at data between 1999 and 2003 and concluded that the average payday loan customer takes out 10 or more loans each year.
Payday lenders take advantage of people who can least afford it.
The Colorado attorney general’s office reports that 7.4 percent of fast cash loan customers in that state are older than 55. Jean Fox of the Consumer Federation of America says that figure underestimates the secondary effect of payday loans on older Americans, because they bail out their adult children and grandchildren when they become victims.
The only way that the poor coal miners and sharecroppers could ever break their chains of slavery was to break free of the company store, just as the only way that Virginians will ever break free from money worries and have a little extra money for things they need is to break free of these company stores now calling themselves payday lenders.
These check cash advance loan sharks charge 390 percent to 780 percent interest, and people who borrow from them end up working several days a week just to pay the interest on these loans without ever reducing the principal.
The only way they will ever take back control of their lives and regain their freedom and peace of mind is to get rid of these payday loan sharks here in Virginia.
North Carolina and West Virginia prohibit payday lenders, but in Virginia and other states, the lenders have hired a fleet of lobbyists and launched a public relations campaign to defeat legislation that would outlaw them. Bad credit payday loan sharks argue that they are providing a necessary service - the same argument made by drug dealers.
But there are alternatives, such as credit unions, that will put people back in charge of their lives again by making reasonably priced loans.
Let’s stop this present-day company-store kind of slavery called payday lenders, who try to portray themselves as some kind of Mother Teresa, interested only in providing loans to people who couldn’t otherwise get them. Rubbish.
