Regulation Over Payday Lenders in Texas

According to a recent report, approximately 8 percent of adults in Texas have taken on a payday loan in the past half decade. Moreover, this is one of the several disturbing results in a study conducted by Pew Charitable Trusts. The study emphasizes that the city of San Antonio must progress with plans to improve the laws for lenders.

In addition, the report found out that of the 28 states with the least regulations in terms of payday loans, Texas is one of them. What’s even more disturbing is the fact that most of the borrowers are using high-interest payday loans to pay for their everyday expenses.

In the United States, a total of $7.4 billion every year are spent by borrowers on payday loans and they pay an average of $520 as interest.

High-interest payday loans are supposed have a two-week term, and these are intended to assist consumers in times of unprecedented financial emergencies. Unfortunately, in reality the term is for five months and borrowers do not actually use it for unprecedented expenses. In fact, several of the loans are used to pay for utilities, credit card bills, mortgage or rent.

A lot of borrowers who take on payday loans most of the time end up drowning in debt, and having to refinance since they cannot pay back the primary loans on time.

In the following month, an ordinance that will put limits on payday loans is set to be proposed by the City Council, headed by Councilman Diego Bernal. The anticipated ordinance moves to restrict payday loans to 20 percent of a borrower’s gross monthly income, and restrict auto title loans to 3 percent of income or 70 percent of car’s value. Also, Bernal also wants the ordinance to control the loan terms and interests.

Because of the lack of regulation over Texas payday lenders, the Legislature must address this problem immediately.

Four Tips to Improve Your Finances

Most people would want to enhance their finances and live a luxurious life so they seek steps on how they can boost their finances, cut down their expenses and increase their bank balance. One of the best ways to increase your bank balance and income is to have financial investments. In terms of improving your finances, here are a few tips.

First, pay all your credit bills and pay back your debts. Once an outstanding debt is disclosed on your credit report, this will definitely have a negative impact on your credit score. That’s why it is recommended to always pay your debts on time and you can even decrease your credit card limits and expenses so that your debts will also decrease.

Second, pay your outstanding credit bill as soon as possible. Contrary to belief, delayed credit payment of a bill is actually recorded in your credit report every month, together with the number of days that you missed your due date. To avoid this, make sure to always pay your bills on time because this will work against the negative effects of delayed payments and helps your credit score to increase.

Third, you should not only aim to get a high credit score but also to maintain it once you achieve it. Again, make on-time payments so that you will have a good credit score, and in order to maintain it, make sure to pay in full as well. Moreover, if you pay your bills at once, this will also enhance your score much further.

Fourth, do not throw away your old accounts because this will be reflected in your credit score as well. The longer the duration of your credit background, the higher your score will be. In addition, be more cautious in opening new accounts as this can decrease your credit score, especially if they are too much.

5 Lessons to Ensure Children’s Financial Independence

Over the past few years, there has been an increase in the number of adult children living with their parents due to financial matters. As a result, preparing them to be financially independent is currently an important aspect of parenting. The following are five key lessons to impart to children to make sure they will have financial independence in the future.

First, manage small, everyday financial decisions. Teach your children to ask themselves whether or not they need to buy something and whether or not it is the best deal. Once they have this state of mind, they will definitely save lots of money in the long run.

Second, get rich slowly. Social media and reality TV shows have caused recent generations to think they can become rich and famous in an instant but the truth is this cannot happen overnight. One example of earning money slowly is compounding interest rates, which could lead to good savings returns.

Third, teach them financial discipline at a young age. For instance, you can put a portion of their allowance into a piggy bank or savings account as soon as possible because this will teach them that saving a small amount regularly can add up instantly.  They will more likely adopt this habit when they eventually have jobs and established their careers.

Fourth, encourage your children to have the spirit of entrepreneurship. Although our society prepares us to be good employees, successful people in places such as Australia are entrepreneurs. Encourage them to put up micro businesses but do not finance their business venture.

Fifth, teach them the difference between good debt and bad debt. Good debt is taking on loans to develop appreciating assets and investments, while bad debt is using credit to purchase a depreciating item. Moreover, encourage the use of debit cards rather than credit cards.

Reimbursement of California Payday Loan Customers

San Francisco’s local authorities have made public that thousands of consumers who are reliant on payday lending or short-term loans and check cash stores in the area can become entitled to a million bucks for restitution against predatory lenders who participate in illegal activities (even if this agency is one of the biggest lenders in the payday loan market).

For those who still have not been able to file any claims apart from the Money Mart located on a desolate place in Seventh and Market streets which is one of the many branches of payday store in the city, Dennis Herrera the City Attorney is now currently on the move to help.

According to Attorney Herrera, it would be unjust to allow the most vulnerably individuals to be harassed and taken advantage of by the stores. San Francisco is an affluent city and it is indeed sad to allow the rich and powerful to rip the rights of these average citizens.

Herrera is working alongside Jose Cisneros, the City Treasurer, in this campaign. On the year 2007, Herrera has filed a case against Money Mart and Loan Mart, two large payday loan companies under the charge of unfair business practices.

According to the City attorney the two agencies were charging too much for the interests because they have reached up to 400 percent. The case was settled through the charge of $7.5 million reimbursements and commitments from the two companies, this is to further eliminate disproportionate interest fees and penalties.

Now, customers of the two companies from California who had been granted loans in the years between 2oo5 and 2007 are entitled to reimbursements. The customers can only avail the reimbursements by Oct.1 of this year; the amount that you can claim is between $20 and $1,800. If you need to call the hotline for your settlement dial (866) 497-5497.

Student Loans: New Subprime Crisis in The Making

For those students having trouble paying for college, government-backed student loans are a much more popular option than private student loans. This is because the interest rates are lower and there are more flexible repayment options. In contrast, private student loans require repayment as soon as the borrower graduates and repayment terms are rigid.

According to a recent report from Consumer Financial Protection Bureau concerning the private student loan market, beginning in the middle of 2000, there had been a growing number of students relying on private loans before they had exhausted all possible federal loans presented to them.

The growth in terms of the private student loan market, which increased from $5 billion in the year 2001 to $20 billion in the year 2008, is almost similar to the growth of subprime mortgage loans during the same time.

Banks discovered that they could package student loans into securities and trade them for a profit to investors. By means of securitization, $100 in student loans could be converted into $105. Because the initial lenders were not hanging on to the loans, they were not in danger if students failed to pay the loan.

Some time ago, a filter operation had been provided by universities, notifying students to the accessibility of private loans when the rest of the alternatives were exhausted.

However, the increase in private student loans is also indicated by an increase in direct-to-consumer lending. Most of the time, these students were not aware that the private loans are less preferred compared with those offered by the government.

The conditions were most extreme at for-profit colleges, a lot of whom had financial connections with private lenders. Based on a report from the CFPB, in the year 2008, a private loan was taken on by 42 percent of undergraduates at for-profit colleges. However, only 14 percent of all undergraduates used a private student loan.