391 Percent Payday Loan

It seems like just a little loan, a few hundred dollars in advance of payday. But at an interest rate of $15 per $100, that little loan gets big in a hurry. And if another loan is needed — which sometimes happens, since the last payday loan took so much pay — total costs can soon exceed the amount borrowed in the first place.

Luis Gutierrez, chairman of the House Subcommittee on Financial Institutions and Consumer Credit, argues that the bill would improve the payday rates in the 35 states with only minimal controls over payday loans. His bill is supported by many people in the lending industry, many Republicans and some consumers.

This regressive bill is even backed by some members of Congress who should know how these loans prey on needy people. New York bans payday loans. But New York’s Gregory Meeks argued in a hearing on the bill that it would provide “options” for people who, in earlier times, “would come back without a limb” if they failed to repay loan sharks on the street.

Others have argued that without these miniloans, people would bounce checks, incurring average costs of $27 or more per overdraft. The overdraft fees that some banks charge are scandalous and deserve more Congressional scrutiny. That does not mean an industry that makes $50 billion a year in loans should be touted as an alternative.

A better option is already in place in some states and for the military — keeping short-term or small loans under a 36 percent annual interest rate, which is high enough. Representative Maxine Waters, a Democrat from California, assessed the Guttierez bill correctly when she said: “We’ve got to resist any attempt to make it look as if we are cracking down, when in fact we are opening the door to more abuse.”

For further details read the news source: nytimes.com

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Terms and Conditions apply. Finance charge will be between £10 and £15 per £50 borrowed. Fees displayed are typical but cannot be guaranteed. Your actual rates may vary based on your circumstances and the lender we select. Representative APR (Annual Percentage Rate of charge): 1355% to 3762%. The APR includes important factors such as the interest rate you must pay; how you repay the loan; the length of the loan agreement (or term); frequency and timing of installment payments; and amount of each payment. Loan amounts are based on consumer's credit history and ability to repay loan. Funds will be deposited the same working day, if approved by 14:30. Approval may take up to 30 minutes in most cases. Payday advances should be used for short-term financial needs only, not as a long-term financial solution. Customers with credit difficulties should seek credit counselling.

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