Payday Loan Times

Everest Metro Police in Wisconsin confirmed that someone has robbed the Payday Loans store in Weston on Friday morning.

A worker was getting ready to open the Pay Day Loan Store when a man walked in with a knife, jumped over the counter and demanded money.

This isn’t the first time this has happened to this same worker, as just three weeks ago she was held up and told police the robber is the same man who targeted the cash advance payday loan store before.

Everest Metro police responded to the call around 8:30 that morning.

The worker told police the robber held her up, then ran off with cash. The Everest Metro Police Chief says he suspects drugs are behind all these instant cash loan robberies.

Police Chief Dan Vergin said: “This isn’t because people can’t pay their grocery bills, and it’s probably is for one purpose, I’m betting it’s going to turn out to be drug abuse.”

Police are looking for a white male who was wearing a brown hooded sweatshirt.

State Rep. Josh Zepnick (D-Milwaukee), a member of the Assembly Committee on Financial Institutions, has introduced two consumer protection bills designed to help citizens who utilize relatively new and emerging financial services of cash advances and auto title loans.

“Payday and auto title loans are largely unregulated in the state of Wisconsin and even the industry itself recognizes that there are bad actors or abusive lenders which are not good for anyone in Wisconsin,” Zepnick said.

“Check cashing, wire transfers and more recently payday cash advances and auto title loan stores tend to cater to a clientele that is seeking short-term solutions to serve their immediate financial needs vs. building a long-term relationship with a bank or credit union.”

Zepnick’s payday advance loan lending bill would limit the amount someone could borrow at any one visit to a payday lender; restrict the number of “rollovers” and discourage turning the payday advance into a long-term loan.

Zepnick said the bill would prohibit the state from creating a database of payday loan borrowers, a “Big Brother invasion of personal privacy.”

The second bill would ban auto title loan outlets from doing business in Wisconsin.

“The practice of borrowing against a depreciating asset, especially one that has a wide variance in tangible value depending on the vehicle condition and history, is dangerous and is financially dubious considering the flooded used vehicle market,” Zepnick said.

“There are some responsible actors in all of the above services - now is the time for them to step forward and help work on much needed public policy changes before they get lumped into the same sinking boat of predatory and irresponsible [no faxing payday loan] sharks.”

The payday cash advance lending industry should provide more information to borrowers than they currently do, Rep. Andy Jorgensen (D-Fort Atkinson) said this week.

Jorgensen said he was introducing a bill that would require such lenders to be more up front about the costs that borrowers face with no fax payday loans. The bill would mandate that lenders disclose the total fees and costs of a loan, as well as the annual percentage rate to be paid, and provide applicants with state-written materials about the payday loan industry.

Payday lenders would also have to file with the state Department of Financial Institutions annual reports detailing the frequency of rollovers, defaults and costs incurred with payday loans. Under the bill, lenders who don’t follow the disclosure or reporting rules would face a $200 fine for each offense.

“Unfortunately, what may seem like easy money to folks in a tight spot all too often ends up putting them in much more difficult financial situation,” Jorgensen said in a statement.

Jorgensen said the only current requirement is that faxless payday loan lenders register with the state Department of Financial Institutions if they intend to charge an annual percentage rate that’s more than 18%. The department said it now has 495 payday lending locations registered, up 12% from last year.

The end of the month approaches and, with it, come the bills. The combination of rent, cell phone bill, credit card payment and other expenses can start to become an overwhelming prospect for young people with little financial experience.

It is a situation any college student can easily fall into.

The payday loan is fast becoming a popular and potentially dangerous solution for student’s short-term financial woes, said Dr. James Grunloh, economics professor and director of the Center for Economic Education.

“You can solve that immediate crisis,” he said, “but you pay dearly for it.”

A faxless payday advance is a short-term advance of money that a borrower promises to pay back within a certain time period, usually two weeks, according to Payday Today, an independent payday lender and product research firm. The borrower simply post-dates a check and walks out the door with cash in hand, only having to provide a driver’s license and proof of employment.

“They’ll basically lend money to almost anybody, which means that it’s a very risky kind of loan,” Grunloh said.

Courtney Lautenschlager, a customer service representative at Payday Loan Store in Oshkosh, said no faxing payday loans act as a safety net for people who find themselves in a bind.

“People take out these loans when they get behind on bills or have unexpected expenses that they can’t go to a bank for,” she said.

“If people use them responsibly, they can be a very good deal for a short-term solution. It’s when people get caught up and the interest starts to pile up that they can get into trouble.”

That interest, Grunloh said, is the problem.

According to Payday Today, Wisconsin is one of only a few states that has legalized payday lending but has placed no regulatory laws on the industry. There are no restrictions on how long a easy payday loan may last, how much a borrower may take out in loans or how much a lender may charge in interest rates.

Grunloh said the only restriction on payday lenders in this state is that they must disclose the annual percentage rate of the loan, but this information is usually buried in the fine print of the contract.

According to billsaver.com, the average credit card annual percentage rate in the United States is 13.37 percent. Compare that to a typical payday loan of $100, where the borrower is expected to pay $20 in interest. The result is an annual percentage rate of 521 percent.

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Democrats who control the state Senate promised today to put new limits fast payday advance lenders, which they called a growing industry that preys on the poor by charging interest rates that can amount to 500% or more.

Senate Majority Leader Judy Robson (D-Beloit) said curbs they are considering include limits on how often Wisconsin payday loans can be rewritten or “rolled over” and a possible cap of $600 on the amount that is borrowed.

Robson said she knew of one person whose $500, supposedly cheap payday loan ended up costing a total of $2,500.

Payday loan lenders “prey on the vulnerable” and locks them into a “cycle of poverty,” added Sen. Jim Sullivan (D-Wauwatosa).

Robson and Sen. Jon Erpenbach (D-Middleton) said they would also pass through the Senate changes that would let cell phones, small business phones and fax numbers be added to the popular “no call” list, which has more than 1.1 million lines registered.

Sen. Mark Miller (D-Monona) also promised to push a bill prohibiting magazine publishers from sending renewal notices earlier than six months before a subscription expires and Sen. Pat Kreitlow (D-Chippewa Falls), but it was the cash loan statements that casued the most stir.

SOURCE: The Milwaukee Journal Sentinel

Grace Jones is executive director of Couleecap, a private nonprofit 501(c)3 charitable organization created in 1966. She recently wrote in to The La Crosse Tribune. It’s paraphrased here:

As families celebrate the holidays, keeping finances in check can be quite a challenge. Despite working hard, many families live paycheck to paycheck, struggling to meet day-to-day expenses or to build a cash cushion for emergencies.

Lacking resources and financial education, families are vulnerable to money traps such as no fax payday loans, a quick growing form of predatory lending in America.

Payday loans do not come cheap. Interest rates and fees typically run between 650 percent or 780 percent APR; The average, supposedly cheap payday loan ranges from $100 to $500; A typical $500 two-week loan will cost the borrower $650 to repay.

According to one study, 91 percent of payday loans are made to repeat customers, cash-strapped workers who fall into a debilitating cycle of high-cost debt. These repeat borrowers often pay far more in interest and fees than they ever received in cash advances.

There are currently 488 payday lenders in Wisconsin, 24 in the four-county service area of Couleecap (counties of La Crosse, Monroe, Vernon and Crawford). Although payday loan companies are licensed by the state, there is no statutory maximum on the interest rates or fees that they can charge.

If you already have one no fax cash loan outstanding, you may find it very difficult to pay the required finance charge payments, much less paying all or a portion of the amount financed when the loan comes due.

If you need a larger, longer-term loan, you should seek other, more traditional, lending sources.

Despite interest rates that can range close to 400 percent, thousands of Washington state residents are flocking to instant payday loan outlets for quick cash.

According The Bellingham Herald, The Washington Department of Financial Institutions recently released a payday lending report showing that payday loan outlets in the state made nearly $1.4 billion in small loans in 2005.

As recently as 2000, the dollar volume of those loans was $580 million. The number of individual loans shows similar growth - from 1.8 million loans in 2000 to almost 3.6 million last year.

Dennis Bassford, president of Renton-based MoneyTree Inc., says his company and others like it provide working people with a convenient shortterm solution to financial difficulties. But critics of the payday advance industry see it as a trap for the unwary.

For Bellingham resident Rhonda Bremner, it was both.

Bremner is a single mom with two teenagers, and two years ago she was having trouble stretching her $10-an-hour paycheck to the end of each month.

With Christmas approaching, she decided to go to the Bellingham MoneyTree outlet because she had seen the company’s advertisements on television. Whatcom County has more than 20 registered no fax cash loan operations.

She borrowed a couple hundred bucks using a check postdated for two weeks out, her next payday. It seemed a lot easier than hitting up relatives or friends for money.

But when payday rolled around, Bremner was still short of cash.

“The next time, you get a larger loan to cover the last loan, and it just takes off from there,” Bremner said. “You really don’t pay attention to how much the interest rate is. All you’re thinking of is getting fast money so your power doesn’t get shut off and things like that.”

The cycle went on for nearly two years. Bremner eventually was getting payday loans from four different companies, her loans totaled $1,600, and her interest payments added up to more than $400 a month. She went to her church, Christ the King, for help, and was referred to Darlene Moore, a volunteer with Love INC., which stands for “Love In the Name of Christ.”

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How does Dave Zweifel of The Capital Times feel about payday loans? Let’s paraphase his recent editorial and find out:

The so-called payday advance lending industry collects 90 percent of its revenues from borrowers who cannot pay off their loans when due.

That’s what the Center for Responsible Lending, a Washington, D.C., nonpartisan research and policy organization, reported last week after conducting a national study of the industry that feeds off people who are desperate for quick cash.

In other words, those stories the providers of online cash loans tell us about how they serve a real need for folks in need of quick cash who then pay them back with their next paycheck is a bunch of baloney.

In its report, the center calculated that predatory payday lending now costs American families $4.2 billion a year in excessive fees. It estimates that the share of that total for Wisconsin’s families who wind up doing such borrowing is $124 million a year.

“Taking the interest on the average payday loan principal as reported by state regulators, and multiplying it by the average number of loan flips per year, we find that the typical borrower ends up paying back $793 for a $325 loan,” the center’s report maintained.

Eleven states ban payday lending and as a result, the report added, they saved their citizens a total of $1.4 billion.

I’ve written about payday lenders several times in the past. Their most egregious practice was to set up shop across from military bases and then make loans to naive young soldiers on their way to Iraq, charging them fees and interests when they needed to “flip” their loans from month to month that amounted to annual percentage rates approaching 500 percent.

In other words, the faxless cash advance lenders had a virtual lock on the soldiers’ next paychecks.

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A financial conference this Saturday aims not to draw people with plenty of money to invest, but low- and moderate-income people who could use a hand with faxless payday loans and other aspects of their finances.

The Madison-based, nonprofit Asset Builders of America will sponsor the second annual Money Conference in Gateway Technical College’s Racine building. The group’s mission is to design and implement wealth-building strategies for low- and moderate-income youths, families and communities.

In other words, reports The Journal Times, it’s aimed at the people who need the most help and have the fewest resources.

“There’s no selling, and no one will try to sign you up for accounts,” said Richard Entenmann of Asset Builders. “It’s just an educational program.”

However, the Money Conference will benefit from the presence of representatives of financial institutions. Part of the hope, Entenmann said, is that participants will meet those people and feel more comfortable about going to them - perhaps instead of cash advance lenders - later if they decide to use their services.

Just as the conference is geared toward those who are least-savvy about money, that target audience is also difficult to draw.

“The hardest part of this program anywhere is to get people there,” Entenmann said.

Asset Builders - which so far operates just in Wisconsin - was founded by Bob Wynn. Before opening his own consulting business, Wynn was the financial education officer for the Wisconsin Department of Financial Institutions.

From 1985-1996 he was the director of minority business development in the Wisconsin Department of Commerce. During that time he created the Early Planning Grant Program and the Minority Business Development Fund which has provided more than $5 million in financing to minority-owned firms.

The Money Conference, which started 6 years ago in Milwaukee, is built around the premise that everyone can build their own future. It is structured to accommodate entire families, hoping to move them away, or at least educate them on, resources such as online payday advance loans.

“We’re making it family-friendly for families to be there and to be fun for kids - and hope they learn something at the same time,” Entenmann said.

Child care is offered - but only through age 5. For children 6 and older, Junior Achievement will offer hands-on, interactive sessions designed to teach children about handling money.

Participants will choose which sessions most interest them. There are more than 20 sessions in all, three of them in Spanish.

Regular, one-hour sessions will include these topics: home ownership; reverse mortgages for senior citizens; credit reports and scores; vehicle financing options; identity theft; starting a business; how to buy food economically and prepare nutritious meals; and one called “Payday Loans - You Can Do Better.”

All participants will be able to take a look at their own credit report if they ask for it. Then they can meet with someone one on one for help with interpreting the report, Entenmann said.

Earlier this week, Prospera Credit Union received the Northeast Wisconsin Chapter Association of Fundraising Professionals’ first Corporate Social Responsibility Award for helping hundreds of people invest in healthier financial futures.

The Appleton Post-Crescent reported that during a luncheon Tuesday recognizing local charitable giving in honor of National Philanthropy Day, which is today, the chapter lauded the Appleton-based credit union’s GoodMoney program.

The program, a joint initiative with Goodwill Industries of North Central Wisconsin Inc., is a nonprofit alternative to online payday loan lending and a gateway to financial education and counseling.

“It’s been nationally recognized and we thought it was natural to recognize that leadership in the Valley,” said Doris Pride, Philanthropy Day chairwoman.

Prospera was one of eight businesses and family groups the chapter commended Tuesday based on nominations from chapter members and the public. Its efforts to teach individuals about various kinds of savings account payday loans were lauded.

Among other honorees were Green Bay Packers quarterback Brett Favre, who founded The Brett Favre Fourward Foundation for disadvantaged youth, and his wife, Deanna, whose Deanna Favre Hope Foundation has raised more than $1 million toward breast cancer prevention efforts.

Ken Eiden, Prospera’s chief executive officer, said the GoodMoney program, which began in June 2005, now serves between 400 and 500 members that would otherwise have relied on cash loans online.

“Folks, when they come in, are in a desperate state and often have two or three payday lenders they’ve been working with,” Eiden said. “One of the things we’ve observed we can do is help them consolidate those loans and help them have a plan to get out of debt.”

In May, the program expanded from its one site at the Darboy area Goodwill retail store to include the credit union’s five branches in Appleton, Darboy, Neenah and Menasha.

“We have much more to do, but we have begun what we believe is impacting and changing lives for the better,” Eiden said. “Our goal is to solve the immediate needs people may have, and then after establishing a rapport with them, take them forward to realizing their visions and their dreams.”

It’s rare these dreams actually involve faxless payday advance use.