Sunday, June 29, 2008

Alabama paper does 8-day series on payday loans

Does your state allow payday lenders to charge annual rates of 456 percent? Alabama does, and in Calhoun County, they outnumber banks, 31 to 30. "Opponents have another name for them: predatory lenders. Their prey tends to be the working poor, the military, seniors, those on fixed incomes, without access to conventional credit," The Anniston Star said in the first installment of an editorial-page series on the issue, which began last Sunday and concluded today.

The 25,000-circulation daily revived the Biblical term usury, which the Oxford English Dictionary defines as "the practice of charging, taking, or contracting to receive excessive or illegal rates of interest for money on loan." The paper said, "Its essential wrongness is noted in history and ingrained in our Judeo-Christian values. See it referred to in unflattering terms in the books of Isaiah, Exodus, Ezekiel, Psalms and others. With this kind of moral clarity, it is perplexing that a biblically based society such as Alabama's would put up with such widespread sin in our midst."

In density of payday lenders by population, Alabama ranks second only to Mississippi, but the problem is national. "In 2006, approximately 19 million Americans used payday lenders, borrowing almost $48 billion from some 24,000 outlets nationwide," the Star said. Twelve states have limited annual interest rates to 36 percent, effectively outlawing the industry because the same interest rate generally applies to traditional small-loan companies. Several other states have limits between 36 and 456 percent. "In states where predatory lending is strongly regulated, the Center for Responsible Lending found that residents saved an estimated $1.4 billion in fees every year," the paper reported. For state-by-state information, click here.

In its final editorial, the Star offered some state and local solutions for the problem. It also published a supportive commentary from Alabama Arise, a leading critic of payday loans, and a rejoinder from Borrow Smart Alabama, which said it is "a group of more than 225 Alabama payday and title-lending stores that have joined together to encourage the wise use of short-term loans and to help the public better understand our services." The state has 1,164 payday lending outlets.

2 comments:

David said...

Payday loan customers applaud the payday loan industry mainly because, when used properly, they are the fastest and safest way to get out of an unexpected financial fallback. An old saying asks the question, "If something isn’t broken, than why fix it?" This is a perfect question to direct to many politicians who are attempting to or have outlawed the entire industry in many states. Of course, many people who are living beyond financial wealth would agree with this action and bond to fix something that isn’t broken. They have even inspired presidential hopeful, Barack Obama, to join their inexplicable motion. On November 4, vote for the peoples’ right to financial freedom and independence.

Payday Loan Advocate said...

It’s no secret that the economy is in the trash, and Americans are looking for some kind of relief. We are facing the worst financial crises since the Great Depression; folks are defaulting on their mortgage payments, fuel costs are outrageous, and unless you have a spotless credit history a loan might be out of the question. The middle class is struggling and the notion of the American dream is diminishing. This load doesn’t seem to be getting lighter, especially when politicians, who caused this mess, are trying to ban the one thing that could help you out in your time of need. In Washington, there has been a bi-partisan effort to hinder, even ban, the payday loan industry. These politicians tend to accuse the industry with what they call “predatory lending.” This commonly used term in Washington just shows how out of touch they are from Main Street. I’m sure that these politicians don’t know what it’s like to be a single father living paycheck to paycheck while trying to raise two children. A payday loan can be an excellent financial tool if used responsibly, but I guess they wouldn’t understand that. With that said, please educate yourself on the issues that affect you the most and exercise your right to vote.

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