Laughable (and very flawed) logic
November 3, 2009 | Uncategorized, research | Comments (0)A new paper uses “social disorganization theory” to make the case that (1) violent crime is higher in lower-income neighborhoods; (2) payday lenders locate in lower-income neighborhoods (3) therefore, payday loans cause violent crime. The conclusion is unsubstantiated and not supported by any evidence whatsoever.
The NBC affiliate in Los Angeles has covered the paper. Note: to the right of the story you can rate the story. Categories include: bored, laughable, intrigued…
Good news in Wisconsin
October 8, 2009 | Wisconsin, industry, research | Comments (0)From the story:
Assembly Speaker Mike Sheridan (D-Janesville) said recently that the bill to cap lending rates at 36% goes “too far,” and he assigned the bill to a committee of lawmakers skeptical of the plan.
The developments come as the payday loan industry has hired 30 lobbyists and a public relations firm. Last year, employees of payday and title lenders plugged more than $140,000 into state campaign coffers.
Learn before you write
September 3, 2009 | industry, research | Comments (0)Does this guy even know how payday loans work?:
With payday loans, the company knows that you need the money now and you really don’t have any other options. Knowing this, they can apply almost any fee or interest rate to your loan and you are likely to pay it.
Payday loans have flat fees. Some of these fees or limits are set by state laws.
CFPA will not protect consumers
September 3, 2009 | alternatives, industry, research | Comments (0)Check the video in this Atlantic Monthly story. Professor Todd Zywicki of George Mason University makes this point:
People get into trouble because hyperbolic discounting, or an insurmountable crisis, leads them to borrow more money than they can reasonably pay back. By the time a 5% increase in your credit card interest rate spells financial ruin, you’ve been in deep trouble for several years
Payday loans benefit families
August 31, 2009 | Missouri, Springfield News Leader, industry, regulation, research | Comments (0)From a letter in the Springfield News Leader from QC’s Tom Linafelt:
Short-term payday loans each year help thousands of Missouri families overcome unexpected financial circumstances and avoid more-expensive fees associated with bounced checks and late bill payments. In addition to being more expensive, these options negatively impact credit ratings and may hurt a consumer’s access to employment, housing, insurance and other credit options.
And with credits cards and other alternatives being squeezed, this short-term credit option is needed more than ever.
New research underscores need
August 7, 2009 | Wisconsin, customers, industry, research | Comments (0)The must-read of the day. From the CFSA news release:
{University of Wisconsin professors} Urban and Bolhassani conducted an independent survey of payday advance customers in Wisconsin, and found, among other conclusions, that 60 percent of those surveyed view payday advances as less expensive than bank overdraft fees, and 40 percent believe credit card late payments are more costly than payday advances.
The study also finds that the majority of payday advance customers choose the product due to an unexpected expense, and they consider other options, such as bank overdraft fees, auto title loans, credit card late payments, pawn shops and borrowing from friends and relatives before taking out a payday advance.
Understanding the terms
July 22, 2009 | industry, research | Comments (2)In an in depth article in Slate.com, Professor Ray Fisman examines whether it all boils down to educating consumers:
If payday lenders really do provide a much-needed financial resource, why deprive Ohioans and American servicemen of this service? A recent study by University of Chicago economists Marianne Bertrand and Adaire Morse suggests there might be a middle ground, by allowing payday lenders to continue making loans but requiring them to better explain their long-term financial cost. In a nationwide experiment, Bertrand and Morse found that providing a clear and tangible description of a loan’s cost reduced the number of applicants choosing to take payday loans by as much as 10 percent. Better information, it turns out, may dissuade borrowers vulnerable to the lure of quick cash while maintaining the option of immediate financing for those truly in need.
The whole thing is an interesting read.
New study distributed
July 21, 2009 | industry, research | Comments (0)Restricting Payday Loans Harms Consumers
In the study The Case Against New Restrictions on Payday Lending, Todd J. Zywicki of George Mason University’s Mercatus Center concludes that “Economic theory and empirical evidence strongly suggest that…paternalistic regulations would make consumers worse off, stifle competition, and do little to protect consumers from concerns of over indebtedness and high-cost lending.”
Full study available at http://mercatus.org/PublicationDetails.aspx?id=27570
Highlights of new study
July 16, 2009 | industry, research | Comments (0)Highlights of the new “Restricting Payday Loans Harms Consumers” study can be found here.
A $10 billion economic impact
July 15, 2009 | industry, research | Comments (0)CFSA issued a news release today on a new economic impact study:
In a first-of-its-kind survey sponsored by the Community Financial Services Association of America (CFSA), financial analysis firm Global Insight examined the economic impact on the American economy of the payday advance industry’s 23,000 store fronts.
The report reveals that, in addition to the 77,000 Americans directly employed in payday advance stores, the industry has acted as an economic agent, broadly contributing to the economies of the states in which it operates.
The Global Insight report–which includes state-by-state breakdowns–reveals that:
- The industry supports over 155,000 jobs nationally and contributed over $10 billion to the national GDP in 2007.
