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.

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.

Payday Loan House Bill for Pennsylvania

According to CFPB, most loans are for hundreds of dollars and are charged with $15 or $20 for every $100 borrowed. Payday loans typically have a two-week term and fees amount to a percentage rate between 391 percent and 521 percent every year.

Depending on the state law, loan amounts and finance charges can differ. If the borrower fails repay the loan in full by the time the due date comes, then the lender is allowed by the loan agreement to cash the check of the borrower in order to get repayment.

There has been an increase in payday lenders across the country within the last two decades. Moreover, payday loans can now be availed online, with the arrival of new media.

According to the report from PBS during the month of May, almost 19 million US households use payday loans. According to industry analysts, this totals to $30 billion in short-term credit annually. While this is not yet a problem for Pennsylvania, it could be in the near future.

Philadelphia Daily News reported that Republican state Rep. Chris Ross sponsored a House bill that would introduce short-term lending to Pennsylvania, where it was originally forbidden. Ross believes that by doing so, a safer alternative will be offered to Pennsylvanians who currently take on loans from Internet companies that can resell their personal information.

According to John Rabenold, a lobbyist for payday lender Axcess Financial, the House bill is considered to be an opportunity for Pennsylvania residents that would provide jobs and cash for financial literacy programs. In addition, Rabenold said that he is aware there is a demand for short-term credit and there is also a supply for it, but he thinks that there is a cheaper and better way of service.

However, Diane Standaert, legislative counsel at the Center for Responsible Lending, opposes the legislation and said that it is a very bad idea.

Kansas vs. Payday Loan Collector Agency

The Attorney General of the State of Kansas has recently announced that he has filed a lawsuit for consumer-protection against a debt collection agency that is based in the state. The said agency was based to collect the debts of consumers for their payday loans.

The complaint was passed to the Pulaski County Circuit Court. According to the file, National Credit Adjusters LCC or NCA of the Hutchinson, Kan., is against the Arkansas Deceptive Trade Practices Act because its collection of consumer debts for payday and high-installment loans is usurious, unacceptable and not legal under the law of the State of Kansas.

According to Atty. McDaniel’s complaint the NCA is distorted to the consumers of Arkansas clients. The law does not state that collecting the payday loans and installment debts should be strictly enforced. In fact, in the state of Kansas, having a group of people to collect payday loans from clients is illegal.

McDaniel is driven to protect the citizens of the state from abuse and illegal activities from payday lenders and other agencies that are connected with them. He further stated that even if they had been successful in closing some of the payday lending firms, they will be very aggressive and vigilant in going after the individuals who practice activities contrary to their law, and those that try to collect on illegal debt is one of them.

The NCA has recently purchased rights to collect on delinquencies. This has led to the purchase of large amounts of debt from payday loans and high-interest installment loans. These loans increase the rates that the law in Arkansas allows.

The lawsuit is requesting the Court to make an action in preventing the NCA to practice illegal activities in Arkansas. It also wants the Court to cancel their currently unpaid loan contracts and order the agency to return the money it has collected to the people.

The attorney also wants the Court to impose penalties for their civil crime by imposing penalties and costs.

The lawsuit asks the Court to issue an injunction prohibiting NCA from actions that violate Arkansas law, cancel outstanding usurious loan contracts, and order NCA to return to Arkansas consumers any money collected based on payday or high-interest installment loans.

Payday Lenders Have a Reason to Increase Rates

Wonga, a payday lender from Britain has made public that they will be expanding their interest lending to small establishments. Though some consumer groups have been opposed to the gesture no one can say for sure that the move will be hazardous to small companies.

Paying interest just to borrow cash is an idea many people will be hesitant to do. Consumers and establishments are willing to pay rates lower than the charges Wonga is offering. A zero interest rate will be very appealing for everyone. However, lenders such as Wonga charge these high interest rates to prevent bad debt expenses.

When payday shops lend money to individuals who may be unlikely to pay off their loans they have to consider the chances that the borrowers may not be able to pay back what they owe. If you think about it is practical for payday lenders to increase their rates for risky borrowers because if they fail to pay the payday shop will suffer. Most of the small companies that apply for a loan in Wonga have high default rates for their loans. The small companies will have to borrow money because if they do not they will die off anyway.

If the small businesses are not allowed to borrow money, their owners will apply for personal loans anyway and will be signing in their business property in the contract; basically it is the same thing.

Government policies should be centered on protecting consumers from negative forces in the environment, not trying to block payday lending to small companies. High interest loans are not negative forces, small businesses do not harm the environment and they do not usually contribute to the worse kinds of pollution. They only belong to individuals who want to engage in the industry.

Preventing lending to these establishments is like killing the dreams of their owners. Also, the prevention of lending to the businesses will be expensive for the government because it would require them to enforce bans which mean more money to spend on forces.