Tuesday, July 3, 2007

Diane Robles, a recently divorced mom, was working as a secretary and going back to school when she borrowed $100 from a payday advance loan lender to make a mortgage payment, a decision that eventually cost her upward of $15,000 in lending fees.

Now a critic of the payday lending industry, Robles said she supports an initiative campaign announced last week that would ask voters in 2008 to put the quick-cash stores out of business.

People such as Rebecca Tuck-White, though, appreciate being able to borrow cash from quick cash loan lenders instead of relying on family members.

Tuck-White was pregnant in 2004 and had put money down on a new home, so she didn’t have cash on hand when her car’s transmission broke. She used a payday loan the way stores advertise them.

“It was literally to bridge the gap,” she said of her $500 loan, which she paid off in two weeks with a $75 fee.

“I don’t think it’s any worse than gambling. There are other social ills out there that could use more attention than the payday loan industry is getting,” said Tuck-White, 31, of Queen Creek.

Still, state Rep. Marian McClure, R-Tucson, who is leading the initiative campaign, said that no fax payday loans ruin lives like drugs ruin lives, which is why government needs laws to outlaw both.

Ending payday loans
McClure wants to outlaw the foundation for payday lenders’ business. She does not want a business to take a post-dated check in exchange for cash today.

For example, a customer who needs $100 immediately writes a check to a bad credit payday loan company for $115. The company gives the customer money and then cashes the check on the customer’s next payday, when the customer presumably will have enough money to cover the check.

If payday lenders were forced out of business, customers would have to find other places to turn for quick cash.

Nancy Lopez of Glendale, who appreciates the payday lenders’ services, took out a loan recently when her cats got sick and the vet bills came. If she could no longer turn to payday loans, she said she would have to go to a pawnshop.

“There’s no other place where you can go and get a small loan anymore unless you go to a pawnshop and put up your heirlooms,” said Lopez, 55 “It serves a niche.”

Once, she said, she had to borrow money from her niece, “which was one of the most humiliating things I’ve ever had to do in my life.”

“What’s more embarrassing?” she asked. “You don’t want to ask your friends for money, and what employers can afford to give money these days?”

Also, Lopez said she prefers cash advances to credit cards because the cards’ late fees and over-limit fees add up quickly.

“You always know exactly what you owe” with payday loans, said Lopez, who works as a customer service representative. “You don’t have any hidden charges. I know I owe exactly $230. No more and no less.”

If payday loans hadn’t existed when Tuck-White’s car broke down, she said she probably would have had to turn to her family, but she wouldn’t have wanted her family to worry.

“You reach a point where you don’t want to do that,” she said. “I was 28 then, being pregnant with my first child. I had been successful. For me, it was a pride issue.”

Hindsight being what it is, 44-year-old Robles of Tucson said that she knows now that instead of spiraling into debt, she could have asked for help from social service agencies or churches. She said utility companies have programs to help in desperate times. And she said she would have considered borrowing $20 from 10 friends instead of $200 from one friend.

Starting in 2000, Robles spent two years taking out and trying to repay the payday advances. She was only supposed to take out one loan at a time, but she had five from different stores.

“When you are desperate, you don’t think about that. You just think here and now,” Robles said.

She was taking home $800 in her paycheck every other week, and each payday she would pay $575 of that to extend her payday loans. Robles filed for bankruptcy to get out of debt.

Today, her credit is destroyed, but she has finished her master’s degree and is the director of facilities for Child and Family Resources in Tucson.

“To get where I’m at now, I made a lot of poor choices, one of which was payday loans,” she said.

SOURCE: The Arizona Republic 

This entry was posted on Tuesday, July 3rd, 2007 at 2:38 pm and is filed under Arizona.