Live and learn
July 13, 2010 | Mississippi, industry, local issues, regulation, states | Comments (0)Did you know there’s a West Point, Mississippi? I learned from reading this article on their attempt to ban new payday loan stores.
Telling us our business
April 6, 2010 | Mississippi, industry, regulation | Comments (0)I love it when a university economist injects theory into the debate. Has this guy ever run a payday lending business, visited a store, seen the books of a company? From the op-ed in a Mississippi newspaper:
Industry advocates might argue that such “low” rates would make it impossible for any business to survive. Such a perspective, however, fails to recognize that changing the market will, in fact, change the opportunities and willingness of consumers to default, thereby reducing some of the need for the current higher interest rates. Furthermore, having so many payday lenders in Mississippi implies that many payday lenders have too few customers to operate efficiently, and such an arrangement makes as much sense as having a thousand farms of a hundred acres each in the Mississippi Delta — a waste of resources.
What is this guy talking about? He missed the day in economics class when they taught supply and demand.
Is there going to be a fight in Mississippi?
January 7, 2010 | Mississippi, industry, regulation | Comments (0)From the Mississippi Business Journal:
Arizona will join a handful of Western states this year in proposing legislation that enacts a new set of regulations on the title loan and payday loan industry, if not eliminate it all together.
In Mississippi, lawmakers will make the most noise over the process of crafting a budget while state revenues continue to plunge, but one member of the House Banking and Finance Committee, where a regulation bill would most likely originate, said that there could be some appetite to address the issue.
“I’ve actually looked into this,” said Rep. David Norquist, D-Cleveland, whose district and other parts of the Delta are heavily dotted with payday and title lenders.
Norquist said his major concern is the perpetual cycle of debt people who use the lenders find themselves in, paying nothing but interest and never knocking down the principle.
Ideally, that’s what any new regulations would seek to eliminate or reduce, Norquist said.
“The best way to do that is to limit the amount of the loan,” Norquist said. “If you look at credit card companies, they’re charging 20 percent, 30 percent. The difference is, they’re allowing you to put $15,000 or $20,000 on these cards. That’s where people can’t get out of the hole. If you limit your exposure, you also limit somebody’s inability to pay.”
“Picking on payday loans will backfire”
October 26, 2009 | Mississippi, industry, positive media coverage | Comments (0)Great editorial out of Mississippi:
Here are their options: Pay overdraft bank fees of $40 a check. Miss a credit card payment that triples their interest rate for a year. Miss a utility payment and incur reconnect charges of $50 or more per utility.
Suddenly, the $22 title check fee seems like a smart transaction. Indeed, that option is at least half the cost of the other alternatives.
In fact, the average payday loan customer is 39 years old and makes $41,000 a year. They are making a rational business decision that saves them money.
Many people with decent jobs live paycheck to paycheck. They have families to feed and bills to pay. Most have a budget, albeit tight, that works each month.
But from time to time, the unexpected strikes. A transmission needs replacing. An air-conditioning compressor blows. A medical expense crops up. They are short of cash.
Wow, they have a map
October 20, 2009 | Mississippi, alternatives, industry | Comments (1)From the story about another meddling city council, this one in Jackson, Mississippi:
Paheadgra Robinson, director of consumer protection for the Mississippi Center for Justice, provided council members with a map of nearly 60 check-cashing businesses, most of them clustered around low-income neighborhoods in south and west Jackson.Robinson said Jackson needs to do something to address what she said is a problem for poor people and minorities. The fees associated with payday loans can be as high as 572 percent when figured on an annual percentage rate, she said. “With Jackson being the capital city, it is something we need to be at the forefront of,” she said.
Robinson said Jackson needs to do something to address what she said is a problem for poor people and minorities. The fees associated with payday loans can be as high as 572 percent when figured on an annual percentage rate, she said. “With Jackson being the capital city, it is something we need to be at the forefront of,” she said.
How about doing something for people who are unbanked or need $300 in credit? Well check cashers and payday lenders are doing something. They’re helping these people.
Local busybodies
October 8, 2009 | Mississippi, alternatives, industry, local issues | Comments (0)From Mississippi’s Clarion Ledger:
The city of Ridgeland this week extended its moratorium on certain businesses officials say tend to cause blight.
Ridgeland joins other metro area cities that have moved to restrict the spread of pawnshops, check-cashing or payday lending establishments and tattoo parlors.
Canton passed a similar moratorium this week and joins Clinton, Madison, Flowood and Pearl in passing restrictions on these operations. Ridgeland’s restriction will be extended to nine months, while officials study to determine a permanent policy approach for limiting or locating such businesses.
It’s a wise move that the city of Jackson also should move to adopt.
To be clear, these are legal businesses, whose practices are as old as commerce itself. However, they tend to draw the poor and vulnerable who have a lack of access to credit or know-how to obtain other loans from more traditional institutions.
That last sentence is patently untrue. Payday lending customers have the know-how to choose the least costly short-term credit service.
Pawn shops boom in Biloxi
August 31, 2009 | Mississippi, alternatives, industry | Comments (0)From the story:
Webb has given loans recently on Rolex watches and multi-carat diamond rings. “We’re seeing some of the nicer things from people who don’t normally need loans,” he said.
Because of the nature of the business, pawn shops also have become retail shops, where savvy shoppers go to look for bargains on used merchandise. Selling the forfeited merchandise turns a profit for the pawn brokers.
The economy “has made people become smarter shoppers,” Webb said. “They’ll come in and buy it pre-owned to make their money go further. Everybody’s trying to stretch a dollar these days.”
More on the competition
August 10, 2009 | Mississippi, alternatives, industry | Comments (0)Mississippi’s Clarion Ledger picks up on the story of costly credit union alternatives, but where is the perspective that maybe short-term loans can’t be offered at a lower price?
Mississippi lender tells “hard truth”
December 8, 2008 | Mississippi, customers, industry, media coverage, positive media coverage | Comments (0)Great column by a member of Borrow Smart Mississippi in the Delta Democrat Times (read it with a Southern accent):
The hard truth about this sometimes debated industry is that people choose to take out payday loans because it is the best choice. The fee they pay to make that choice saves them more than it costs them.
No need to take my word for it. The Federal Reserve has already studied the matter in Georgia and North Carolina where legislators opted to cap fees so low that cash advance lenders shut their doors. The industry no longer exists.
The Federal Reserve reported that “Georgians and North Carolinians do not seem better off since their states outlawed payday credit: they have bounced more checks, complained more about lenders and debt collectors, and have filed for Chapter 7 (“no asset”) bankruptcy at a higher rate.”
The report goes on to say that “banning payday loans did not save Georgian households $154 million per year, as (one opponent) projected, it cost them millions per year in returned check fees.”
The more, the better.
August 29, 2008 | Mississippi, alternatives | Comments (0)Here’s a story from Mississippi about a new payday lending alternative. The Payday Pundit thinks this is great. The more choices consumers have when it comes to short-term financial products, the better! However, because you’ve come up with an alternative doesn’t mean you should replace existing products. Let the market work and let consumers choose which product they like better. There is one thing in this announcement that makes this pundit think that this new loan will not replace payday loans outright:
There are no fees to participate in the BankPlus program, but a credit check is required, and the credit score affects the loan amount for which a customer is approved. Customers also must complete a financial literacy program before they receive the loan and they receive credit counseling once they are approved
One reason people take out payday loans is because there is no credit check required. Imagine if you’re a busy person and need money today, something tells me you won’t have time to receive credit counseling before you need the money.
