2nd Ohio city council limits payday lending
April 29, 2008 | Ohio, industry, local issues, regulation, states | Comments (0)The city of Parma, Ohio has moved to restrict the opening of new payday lending stores according to this article. Here’s the meat of the piece:
The law allows one store for each 10,000 residents. There are seven stores now in the city. With an 80,000-plus population, one more lender could open.
It’s astonishing to the Payday Pundit that city councils believe they have the expertise to know exactly how many payday loan stores a city should have. And wouldn’t more stores, not less, drive competition and keep costs low?
Arkansas pawnshop owner: “We expect business to double.”
April 28, 2008 | Arkansas, alternatives, industry, states | Comments (1)Car repo men and pawnshops booming in Arkansas and expected to grow in the wake of payday lending stores closing. From the piece:
People pawn golf clubs, CDs, tools, and a big trader is gold jewelry. At nearly $1,000 an ounce, it’s hitting record levels.You know you can’t go to a bank and get a $25 loan to pay your gas bill,” says Pakis. “We are here for people that don’t necessarily have a credit card. We can always help out people.”
Pakis says with the slow economy and Arkansas payday lenders forced to shut down, that he expects business to double by the end of summer.
Legislators taken to task by NaugBlog
April 28, 2008 | Ohio, industry, positive media coverage, regulation, states | Comments (0)Thanks to David Martin for the hat tip to this great post from the NaugBlog’s Matt Naugle on payday lending legislation in Ohio.
391% is VERY misleading, as pay-day loans are supposed to be PAY-DAY LOANS… Which means an advance on a paycheck from an employer in two weeks. The actual interest rate is 15% (Get out your calculator: $15 is 15% of $100), which is quite reasonable, especially when you consider the risk these companies are taking by giving money to people who need short term loans.
So what will the legislature and Governor do by passing this law? They will decrease the availability of payday loans, which will put more hardships on working class people who might have an emergency need for a short term loan. So this will encourage more use of credit-cards and possibility bouncing checks, both options include hefty late-fees and serious fines.
This is just another example of the growth of the nanny state. The legislature needs to keep it’s grubby hands off of the payday lending industry and stop making more decisions for consumers. People, and not government, should be trusted to know what each person’s financial situation is and people who take out payday loans clearly know they are only for short term emergencies and understand the cost of delaying payment.
And if this law really puts 1,600 stores out of business, then this is one more example of Ohio’s government making Ohio’s business climate more unhealthy than it already is. Maybe if they would stop passing so many stupid laws, then more Ohioans could have better paying jobs and avoid short term emergency loans in the first place?
Full-sized hang glider $500
April 28, 2008 | alternatives, industry | Comments (0)…Or perhaps you are interested in a homemade bear costume complete with “musty scent.”
The Cleveland Plain Dealer has an interesting look at the pawnbroking business.
People sometimes confuse pawnbroking and other short-term financial services with payday loans. While they offer another option for people facing and unexpected and unbudgeted expense – pawnbroking and payday loans are very different services. Here are some FAQs about payday advances.
Center for Consumer Freedom takes on “patronizing activists”
April 28, 2008 | positive media coverage | Comments (0)The Center for Consumer Freedom posted some more food for thought regarding the payday lending issue on their website.
At a time when so many Americans are facing unprecedented financial difficulties, it seems out of the question to take short-term loan options away from consumers—especially when many of them have few alternatives as it is. But for self-righteous individuals who would prefer to make decisions for all of us, protecting choices (or offering more of them) is a low priority.
Consumers can determine their financial destiny
April 28, 2008 | Chicago Tribune, Illinois, media coverage, positive media coverage, states | Comments (0)A letter to the editor from Tommy Moore can be found on the Chicago Tribune website. It’s recommended reading:
Consumers have a right to determine their own financial destiny and make their own choices for what’s best for their financial situation and their families.
Three facts from Jamie Frauenberg
April 28, 2008 | Columbus Dispatch, Ohio, industry, media coverage, positive media coverage, regulation, states | Comments (0)Jamie Frauenberg, President of the Ohio Association of Financial Service Centers, minced no words this weekend in an opinion piece which appeared in the Columbus Dispatch. This sort of clear thinking brings up precisely the points which critics can never seem to answer.
First, the loan is made for a two-week period, not 52 weeks. Why not calculate the interest based on the actual length of the loan? In this case, it would be 15 percent.
Second, using a payday loan to address unexpected financial shortfalls is far cheaper than alternatives, such as bouncing checks and overdraft-protection fees. Eliminating this product in no way affects demand; it simply drives consumers to more costly, possibly even illegal, alternatives. Other suggested options, such as borrowing from coworkers or family members, are simply not practical for many.
Third, delivering these products is relatively expensive because of the associated costs (labor costs, renting and maintaining storefronts, marketing expenses and bad debt, etc.). As a result, the industry average net income on a two-week loan with a $15 fee is $1.28. If the rate was capped at 36 percent, lenders would actually lose $11.37 for every $100 loaned, once the associated costs are subtracted. Obviously, the industry would be forced to stop offering payday loans if such a cap were implemented.
Wow, a balanced story on payday lending!
April 28, 2008 | Mt Vernon News, Ohio, industry, media coverage, positive media coverage, regulation, states | Comments (0)Dylan McCament at the Mount Vernon News in Ohio has done something very few reporters even try; he wrote a straightforward article on payday lending giving equal weight to industry and critics and with no loaded negative tone.
The Payday Pundit applauds Mr. McCament for practicing journalism the way it’s supposed to be practiced. Unfortunately, this approach will preclude Mr. McCament for getting a job at a larger paper such as the Cleveland Plain Dealer.
Ohio: Buckeye Institute weighs in
April 28, 2008 | Ohio, Times Gazette, industry, media coverage, positive media coverage, regulation, states | Comments (0)In a piece co-authored with Tom Schatz of Citizens Against Government Waste, David Hansen, President of the Buckeye Institute offers some payday opinions in the Hillsboro Times Gazette today. Money quote:
Ohio taxpayers should be wary when politicians begin picking winners and losers in any marketplace. Their new target in Ohio and in other states is the payday lender industry, even though private sector payday loans are a legitimate business with tens of thousands of employees across the country that help provide a proportionate remedy to meet the short-term financial needs of millions of working customers.
The payday lending industry has many supporters at think tanks and universities. Scholars who crunch numbers and actually know the facts understand payday loans are a viable and important alternative to bounced check fees, overdraft protection, and other costly services.
“..careless behavior or irresponsibility can’t be legislated.”
April 28, 2008 | Daily Press, Virginia, industry, media coverage, positive media coverage, regulation, states | Comments (0)So says a wise Virginian in this letter to the editor in the Daily Press. Mr. Gerald Ross of Hampton says he’s never used a payday loan, but thinks the responsibility for personal financial decisions should be up to the individual, not the government.
The Payday Pundit agrees.
