Yes, a contradiction
June 30, 2009 | Kentucky, alternatives, industry | Comments (1)Kentucky Youth Advocates say consumers use payday loans because they don’t have other options. So the group calls for banning payday loans. Obviously, they failed high school logic class. From the story:
Many of the participants also said they were distrustful of all financial institutions because of fees associated with banking.
Steven Schlein, a spokesman for the Community Financial Services Association of America, a short-term-lending trade group, said the survey does not adequately reflect the experiences of most payday loan users.
“We have tens of thousands of customers in Kentucky and very few complaints,” Schlein said.
The report suggests that Kentucky create alternatives to payday loans, such as the “Save It! Loan” program run by the Mountain Association for Community Economic Development and the Appalachian Federal Credit Union. The program offers 10-month loans with a cash savings account.
Other recommendations include using churches to increase financial literacy and encouraging banks and the government to reach those who are distrustful of banks. The report also calls for a cap on payday-loan interest rates.
But Schlein of the trade group said the survey found that many people go to payday lenders because traditional financial services won’t serve them. A 36 percent cap on interest — which has been proposed — on payday loans would shut down many short-term loan operations, leaving people with no options, he said.
“They are contradicting themselves,” Schlein said.
Comments»
Banks have a provision for loan losses 1-2%. The don’t have the appetite, for risk, to offer payday loans as a main product line. Besides, they’re too busy collecting the easy money – overdraft fees.
These groups do their research, dance around the topic and when it comes down to a solution; it’s never realistic.
If the country put a cap on the price of cars, it would suck all the competition out of the market and fewer cars would get sold. The same would happen to lending.