Gotta watch out for Vehicle Title lenders, too. They charge *triple digit* interest on loans of up to half the value of your ride. You soon end up owing far more than the original loan.

Their parent corps make big contributions to pols, so their quasi-legal status tends to be overlooked. Pols say they don't want to legitimize them by regulating them, but they don't close them down, either.

Parasites or not--payday lenders do provide a product that a LOT of people purchase. What worries me about states like Arkansas, North Carolina, et al, who pass laws that basically run payday lenders out of business is that there is an OBVIOUS demand for these short-term loan products and there are few alternatives. The banks and the credit unions have had YEARS to compete with these very profitable businesses--but have not offered a product to compete with them. Nope. In fact, a lot of these payday lenders are OWNED by the very banks that have a lot of influence on our elected officials. Not long ago I read a news release that the Federal Reserve (whose job it is to REGULATE banks) was going to spend a bunch of tax money to go around the country and try to FIND these products being offered by banks. Now--this says to me that if the FED has to go hunting for them--and they know the banks business pretty well--then there aren't many around. Banks and credit unions have had years to offer up competitive products that meet the demand for them--but haven't. And they are not going to. The only way I can see that happening is if somehow the legislation is changed so that they will be profitable--and in order to be profitable--these short-term loan products need to cost around 36%--or you just can't make it cash-flow.

There is one credit union product--Stretch Pay--which is available to limited markets that isn't all that successful. I applaud the credit union for trying. I really really do. But these loans are at 18% (would be illegal in Arkansas) and require that borrowers attend financial education classes and most are not able to borrow money until after they have worked to improve their bill-paying history/credit score--generally taking several months. These loans are NOT made at 2:30 on a Sunday afternoon when you get a flat tire and you need to buy a new one before work on Monday. They are a WONDERFUL product for people trying to improve their credit scores, improve their financial knowledge and get back into mainstream banking. They are also not very popular. There are a few non-profits that are also trying to provide these small amount loans--one I am familiar with has been unable to break even after almost 3 years. They are not for everyone because they require that you actually plan your spending, spend less than you earn (which is getting harder and harder for most of us to do) and to take classes with others who, like you, can't seem to manage their money and are embarrassed by that.

Nope. I think what Arkansas will find that a great number of their payday loan borrowers will do what others have done--get their payday loans from another state or from an offshore payday lender--where they have limited or no protection under the law if the deal should go south. The other thing that is happening in these areas is that Loan Sharks are making a comeback. Yep. The kneecap breaking kind.

I agree that these products can become an addiction that one may never be able to get out from under (we call that "Perma-Debt--like permafrost). Unfortunately, most people in our country do not do a very good job of planning how to spend their money and consequently they make decisions based on immediate need that are harmful to their own economic best interest. We have such innumeracy in this country--people thinking that they can't do math or balance their check book or not taking the time to understand the terms of the credit card contracts they sign (and it DOES NOT take a degree from the Wharton School of Business to understand the bloody things--just very good lighting and a magnifier! And why would you sign something you don't understand? How dumb is that? If you don't understand it CALL the credit card company and keep their operator occupied until you DO understand it. They hate that.) that is the original sin...but then with the cost of living ever increasing and budgets being squeezed so tightly and our government giving away our tax money to people who don't need it and other useless endeavors--well--don't get me started.

The thing that this whole argument says to me is that we need an additional tier of 'banking' for cash conversion and small loan products. These activities are not profitable for banks. They are not profitable for credit unions and I doubt very much that mainstream financial service businesses want to deal with these small sum exchanges. On the other hand--banks aren't willing to locate in low income neighborhoods, are making a TON of money off of over-draft fees and charge you to keep and spend your money if you don't have very much. It costs a lot of money to spend your money when you are poor.

The Payday Lending Industry--in fact all of the Alternative Financial Services--have got some very bad players that ought to be drummed out of business either by the better performers or by legislation. The Alternative Services Industry would be very smart to start to redefine their industry and to police themselves--figure out a way for them to stay in business in the face of this backlash--by figuring out how to provide better services to people who deserve it--borrowers who pay back their 2 week loan on time--why not offer them a discounted rate? Require them to pay for "Community Reinvestment" like banks do and offer financial education for free on TV or classes or on the internet or something. They don't seem to be thinking in this direction (frankly--few people that I've spoken with are--and those who are only started doing so after I suggested it.)

It really isn't the products that are bad--because it is immensely better to borrow $200 for $20 even if the annualized interest rate is 512% if the alternative is to bounce even one check at $29 a pop--or to lose your job because you can't get your car fixed or find day care for your baby.

The problem is that when things were good we let the government and business owners bust up our unions--and now we are suffering because real wages--our spending power--is DECLINING. It isn't the payday lenders fault--it is BECAUSE WE LACK FAMILY SUPPORTING WAGE JOBS, we lack affordable education and job training and our traditional work supports--like Unemployment Compensation and Job Training are being de-funded by the people we have elected to office to represent us. We also lack confidence in our ability to manage our money. I see that all the time. If our schools don't educate us--we need to learn on our own.

(One interesting historical note--these kinds of products--as well as all of those goofy mortgage products like ARM's and Balloons and Interest Only--are NOT new. The last time they were popular was right before the Great Depression. Now THAT scares me.)

A pay day loan is typically for a few hundred dollars, with a term of two weeks, and an interest rate as high as 800 percent. The average borrower ends up paying back $793 for a $325 loan, according to the Center.

http://www.reuters.com/article/newsOne/idUSN1045663120080324?pageNumber=1&virtualBrandChannel=0

there is no way to hit the ground, you always dig deeper and deeper with such loans

Many people just can't get enough of payday loans, they keep on spreading negativity about the payday lending industry. C-E-O of Check-Smart, Ted Saunders says payday lenders are important to Ohio’s economy. He believe that payday loans can create an impact to the state on a favorable way. So, what essentially is happening, is that the already honest and compliant lenders of Instant Payday Loans have been run off, and free reign has been given to the banks, who are the crooks that created the economic crisis to begin with. There are many people who are against payday loans, but I don't think they can be easily beaten.

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of payday stores (see page 8 of the report). But remarkably, the highest concentrations (on a per person basis) of payday lenders exist in rural areas rather than in urban areas. This is shocking and troublesome. As the urban foreclosures an
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