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.
1 comment:
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.
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