Comments on: More on Sheila Bair’s remarks http://paydaypundit.org/2009/10/27/more-on-sheila-bairs-remarks/ News and Information About The Payday Lending Industry Fri, 18 Jun 2010 21:33:31 -0700 http://wordpress.org/?v=2.9 hourly 1 By: Jon Schultz http://paydaypundit.org/2009/10/27/more-on-sheila-bairs-remarks/comment-page-1/#comment-8387 Jon Schultz Tue, 27 Oct 2009 18:17:55 +0000 http://paydaypundit.org/?p=5782#comment-8387 The significance of the APR is proportional to the term of a loan. For a 30-year home loan at 6% APR, adding one percent to the APR increases the total cost by over 20%, whereas with a two-week payday loan at 400% APR, adding one percent to the APR increases the total cost by less than a quarter of a percent. APR caps are unscientific, eliminate short-term loans from the marketplace, and hurt consumers who only qualify for short-term loans by cutting off their access to credit, even in emergencies, or driving them to the dangerous black market. The significance of the APR is proportional to the term of a loan. For a 30-year home loan at 6% APR, adding one percent to the APR increases the total cost by over 20%, whereas with a two-week payday loan at 400% APR, adding one percent to the APR increases the total cost by less than a quarter of a percent.

APR caps are unscientific, eliminate short-term loans from the marketplace, and hurt consumers who only qualify for short-term loans by cutting off their access to credit, even in emergencies, or driving them to the dangerous black market.

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