28% Payday Loan Rate is Too Much For Consumers and Companies
November 5, 2008 by awjolls
Filed under Credit News
Go Ohio. Yesterday, they voted to keep payday loan rates at 28 percent for an annual rate. The result: consumers win but what about the payday loan places? CashAmerica decided to announce it’s closing 43 locations because it “can’t sustain small, short-term unsecured consumer credit at this rate”
The new law reduces the fee charged on a $100 two week loan to $1.08 (less than 10 cents a day).
Think about this. A business closes down because it can’t afford to charge 28% a year in interest.
We used to be able to live without these places, just like we got along fine without storage unit places for centuries, and we used to get by in smaller houses. I know someone can give me some great example of where a payday loan comes in handy. But, I long for the days we would go to friends and family for times of need.
Similar Posts:
- Payday Loans and Your Credit Scores – Episode #30
- What is a Charge Card? – Episode #41
- Loan Modification vs. Loan Modi “fiction” – Episode #94
- Installment Loans and Credit Scores – Episode #58
- Translating Your FICO Credit Score Into Interest Rates – Episode #54
- Financial Aid and Credit Scores – Episode #66
awjolls,
It costs more than $1.08 per one hundred just in third party fees alone to do a payday loan. Guess what, I am not a payday lender. In fact I own a company called YadYap (payday spelled backwards) that is close to launching a peer-to-peer payday loan platform. This website will allow lenders (everyday people) to bid on borrowers short term loan requests. Our goal is to get loan rates as low as the market will possibly allow. We hope to create a social connection between borrowers and lenders, and make it a win/win for both sides.
Please visit our website that has a link to our blog to get more information.
You can still go to your friends and family to ask to borrow money. Mine come to me on a regular basis. With that said, many people don’t want to ask others to borrow money. Would you loan a stranger $100 for two weeks if they paid you $1.08? If that stranger doesn’t repay the loan, then you have to do 92 1/2 more loans just to make up your loss, hoping that all of those people repay you as agreed. It’s a business model that just doesn’t work.
In an economy where the federal government is giving the banks taxpayer dollars so the banks will loan the money back out to those same taxpayers, why do you want to take a credit option away from people who just want a small loan for a short period of time? The banks won’t make this type of loan, they’ll just charge overdraft and bounced check fees, which can be more expensive. The fees and the amount of the overdraft will be paid on the customer’s next payday. Someone needs to explain to my why that isn’t considered a payday loan. You’re borrowing money from the bank until you get paid, but they’re not disclosing an APR that is higher than the amount charged by any storefront payday lender.
We used to get by without cars, planes, the intenet, television, refrigerators, and a whole host of other products and services. Just because we can make do without doesn’t mean we should take away the choices now that they’re available to us.