Nanny-state celebration
January 17, 2011 | industry critics, Montana, Rate Caps, State legislation | Comments (0)A reader of The Billings Gazette doesn’t think payday loans are good and everyone else in Montana shouldn’t have the right to make their own decision about their finances:
The truth is, high-interest payday and car title loans are not a good option for those in need of emergency loans. People in need of emergency money can find loans via credit unions, their employers, friends and family members.
Those options were available before and consumers still used payday loans. Now all they have is more expensive options – or no options at all.
The new landscape
January 7, 2011 | CFPB, industry, Montana | Comments (0)Discussed at Credit.com:
Nationwide, the number of payday loan stores dropped from 23,600 in 2007 to 20,600 in 2009, a 13% decline, the Journal reported. The amount of loans they gave out declined 24%, to $38.5 billion in 2009. Meanwhile, banks actually added locations, growing 1.3% between 2007 and 2009 for a total of 98,000 branches.
The amount of loans dropped off a cliff, however. Banks gave out $433 billion in loans in 2009, a 51% decline from the $887 billion they loaned in 2007.
In addition to their own reluctance to lend in the midst of a recession, banks are now limited by new federal legislation regarding credit card and other types of fees.
Even as voters and legislatures have made payday loans illegal in some states, elsewhere payday lenders have capitalized on banks’ recent financial and regulatory difficulties. “We believe that we’re starting to see a benefit of a general reduction in consumer credit, particularly … subprime credit cards,” Patrick O’Shaughnessy, CFO of Advance America’s, said at a November meeting of investors, as reported by the Journal.
Who could have predicted this?
January 6, 2011 | Montana | Comments (0)Uh, everyone. The Montana Division of Banking is now concerned about consumers turing to Internet loans in the wake of the rate cap taking effect.
Bailing in Montana
January 2, 2011 | Montana | Comments (0)Goodbye, Montana
December 30, 2010 | Montana | Comments (1)From the story:
When it comes to a short term loan like the payday loans, the benefit for the lenders depends on the interest rate. Generally, people don’t take huge amounts as payday loans and hence if the interest rate is not high, then it does not turn out to be a realistically profitable endeavor for the payday loan lenders. When it comes to US, the interests are being capped in many states recently, Montana joining the list as 16th now. From 1st of January, 2011, it will become a law in Montana so that lenders won’t be able to charge interest more than 36%.
As a result, payday lenders are leaving the state and finding other places to continue with their business. Many actually left right after November when the Montana voters passed this initiative overwhelmingly. Those who already left include names like Express Loans, B&R Check Holders etc.
When will our critics debate rate caps honestly?
Those elusive alternatives
December 20, 2010 | Montana | Comments (0)It would be great in someone in the Montana state house would follow up and see how many citizens used these payday loan alternatives. From the story:
Alternatives to predatory loans already exist and more are emerging. The Montana Credit Unions for Community Development program, which extends small loans at far lower interest than payday or car title lenders, reports that loans through its program grew 25 percent over the last quarter.
Predictable
December 17, 2010 | Montana | Comments (0)Now that they have effectively banned storefront payday lending, the Great Falls Tribune is reporting this:
The Montana Division of Banking and Financial Institutions issued a press release Thursday urging consumers seeking short-term and/or small loans on the Internet to be careful in reviewing the terms of the loan agreement.
Closings in Montana
December 1, 2010 | customers, employees, Montana | Comments (0)QC Holdings will close four stores in the state because of the new rate cap law. From the story:
“Montana voters were misled into believing that a 36 percent APR cap would lower the cost of short-term loans,” said QC president Darrin Andersen. “Today’s hard reality is that that cap is forcing cash-strapped Montana consumers to more clostly and credit-damaging options like bounced checks, late bill payment penalties and unregulated, offshore Internet lenders.”
QC said it has extended loans to more than 14,000 consumers in Montana.
Critics should be honest when pushing rate caps. They are a ban on payday lending. Consumers will NOT get 36% short-term loans.
Flattened in Flathead
November 16, 2010 | Montana, regulation | Comments (2)From the story:
Several local short-term loan businesses in the Flathead are shutting their doors after voters passed an initiative capping the interest rates they can charge their customers.
Shelley Gould of Red D Cash in Evergreen said she will be closing after 10 years now that I-164 is in place, putting herself and another employee out of work.
“This is really, really a travesty,” Gould said. “(It’s) knocking on the door of free enterprise – shut down free enterprise if we don’t like what they’re doing.”
Well said.
What were the voters thinking?
November 14, 2010 | Montana | Comments (0)An editorial in a Montana newspaper asks that profound question:
It is perplexing why Montana voters chose to kneecap two lines of business, when it would obviously cost a lot of jobs at a time when the state’s economy is already struggling.
We have to wonder if voters really understood the ramifications of passing initiatives 161 and 164. Did they somehow miss the fact that a minimum of 32,000 Montanans are already unemployed?
People will always vote to make something cheaper.
