Arkansas chases payday lenders out of state
The Center for Responsible Lending reports on a major development in Arkansas:
Georgia and North Carolina have already outlawed the practice, and Virginia is taking steps towards reform.
Good news out of Arkansas: after a hard-fought legal and political battle, the state should soon be rid of predatory payday lending.Facing South reader KE points out that Southern states have led the charge on cracking down on predatory payday loans, which, according to the Center, gouge Americans for about $4.2 billion a year.
Arkansas Attorney General Dustin McDaniel ordered all payday lenders operating in the state to cease and desist their practices yesterday, insisting that the lenders void all current and past due debts. The attorney general threatened litigation should payday lenders fail to comply with his order.
Arkansas has a constitutional interest rate limit of 17 percent, but payday lenders have been charging over 300 percent interest in the state since 1999, when a state law was passed declaring that their fees were not interest. Attorney General McDaniel said a state Supreme Court ruling last month makes it clear that payday lenders are subject to the interest rate limit.
"These businesses have made a lot of money on the backs of Arkansas consumers, mostly the working poor. Charging consumers interest in the range of 300 to 500 percent is unlawful and unconscionable, and it is time that it stops," McDaniel said.
Georgia and North Carolina have already outlawed the practice, and Virginia is taking steps towards reform.
Labels: arkansas, center for responsible lending, payday loans
3 Comments:
Believe me when I say that the Payday Lenders are far from being chased out of Arkansas. They have money (lots of money) and have a vested interest in staying in business to make lots more money. Many lenders are already using out of state banks or finance companies to get around the Arkansas law and that loophole will have to be addressed before payday lenders vanish from Arkansas. Is the interest rate above the state law...yes...is it predatory...definitely. There needs to be a Federal law...why aren't any of out Presidential candidates talking about this subject? Getting a payday loan is a temporary fix that creates a much bigger long-term problem for the vast majority of borrowers. It does provide assistance...it assists the payday lenders to become wealthy. Loan sharking should be against the law in every state and predatory practices should be stopped.
As a representative of the payday lending industry, I believe it is critical for people to understand who is a typical payday advance customer. Payday advance customers are educated, hard-working adults who often want and need access to short-term credit. They are people with steady sources of income and bank accounts who sometimes have unexpected or unbudgeted expenses that require cash between paychecks. It is estimated that 19 million households nationwide used payday advance services in 2006 alone. Without other alternatives, limiting access and restricting where businesses can operate is detrimental to these consumers.
Additionally, no one is offering any real alternatives to payday loans. To date, almost all of the attempts to create payday loan alternatives have either been charity-based, required government subsidies, unavailable to the general public, unprofitable or unsustainable. Millions of customers across the country have used payday advance responsibly and appreciate having somewhere to turn when they need quick access to credit.
OH YEAH, GREAT NEWS! You moron! Now who are we supposed to turn to when we have an emergency? Are we supposed to just bounce checks at %1000+ interest? Why is it that you, who do not use payday loans, think you know all the answers? If you don't use them, stay out of it! You are ruining it for the rest of us! We need to stop blaming the payday lenders for everyone else's irresponsibility! If I borrow 100 bucks from a friend, and am not able to pay it back, I don't blame my friend for lending me the money! That is just stupid. So why are we blaming our payday lender friends for providing a great service? In a recent article by ex senator and presidential candidate George McGovern, he says, "[p]ayday lending bans simply push low-income borrowers into less pleasant options, including increased rates of bankruptcy," Mr. McGovern rightly poses the question: "Why do we think we are helping adult consumers by taking away their options?"
Later in the article, he says, "[t]he nature of freedom of choice is that some people will misuse their responsibility and hurt themselves in the process. We should do our best to educate them, but without diminishing choice for everyone else."
This is how we need to look at this topic. Leave the payday loan stores alone and look for other options. Instead of taking away payday lenders, beat them at their own game by giving consumers even more alternatives!
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