Payday Loan Places
Posted: June 10, 2016
I was driving by London Road last week when I saw a number of people picketing outside of one of those payday loan places. I didn't realize it at the time, but the high-interest lenders' business model relies on borrorowers' inability to repay an initial small-dollar loan and trapping consumers in a spiral of growing debt. In fact, the average Wisconsin payday loan of $320 carries 589 percent annual interest and comes with fees and charges of $866.
The Consumer Financial Protection Bureau (CFPB) has unveiled a proposal for a new national rule on payday and car title lending that has the potential to protect Wisconsinites from predatory high-interest loans.
"The CFPB's proposed rule is a big step in the right direction, but we have to do more to ensure this rule truly protects consumers from the harms of predatory high-interest loans. Advocates will be working hard over the next few months to help the CFPB understand the importance of closing loopholes in what otherwise is a well-though-out proposal. In doing so, they can shut the debt trap once and for all," said WISPIRG Director Peter Skopec.
Eighteen states and Washington D.C. have declared payday lending an illegal act of usury. Others have capped interest rates well below what payday lenders demand, effectively wrecking their business model. Last week, the Consumer Financial Consumer Protection Bureau weighed in with a new set of rules designed to police the industry nationally. However, the CFPB attempts to allow some loans while disallowing others. To complicate matters further, the new rules would kick in only after a lender places six loans with an individual during a 12-month period. So, why would the CFPB allow payday lenders to do it six times when, many times, individuals cannot repay the original loan?
Those in opposition to the new payday lending rules say millions of Americans use the short-term credit to tide them over to the next paycheck. In fact, two surveys have indicated that payday lending customers reported a positive experience after receiving their loans. However, I cannot see how preying on uneducated loan recipients is good business for anyone.
RANDOM THOUGHT: Have you watched any of the NHL games? I suppose I am in the minority, however, it is worth watching if the San Jose Sharks are playing a home game. Just before the starting lineups are announced, a hologram of sharks lurks beneath the surface of the ice. It is really good television.