It’s good that Congress is close to approving a bill that would cap the annual interest rate charged on payday loans to members of the military at 36 percent. The effective annual interest paid on such predatory loans can now exceed 400 percent. But why not extend this protection to all consumers?
The Kansas Legislature should look at passing a similar APR cap on payday loans during the next session. Denied their outrageous profits, some of these companies might move elsewhere.
Posted by Randy Scholfield
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16 Comments
I think we may have the comment function fixed now, if anyone cares to weigh in.
Quick comment; the legislature surely should bring the payday loan industry under the provisions of the UCCC, as enacted in Kansas, making it subject to the rate caps and disclosure rules thereunder.
eh, whatever. It isn’t any different than credit card companies, and nobody is moving to legislate them.
Pay Day loans in the Military? I guess that when I reported into an officer making me sign for my pay is a bit out of date from today’s military. Why would anyone get a loan at such unreasonable rates? There are military societies that help soldiers, sailors, airmen and mariens with financial problems if there is a need.
Just ask your friendly First Sergeant, Chief Petty Officer or Top if you need a loan. They can point you in a better direction than what appears to be an outrageous program.
It is a lot different than the credit card companies . . .I have never seen a credit card with a 400% interest rate. I realize it is a choice to use the services of a place such as payday loans but let’s not ignore the fact that they are blatantly taking advantage of their customers who often times use their services when there is no where else for them to turn. These types of businesses need to be held more accountable for their actions.
The loans are severely short term, and very small ammounts. The APR is blown out of proportion, it does not add up to much interest IF it is paid back on time.
A 36% cap would make it not worthwhile to help these servicepeople out when in a pinch, and effectively hurt the service people.
The government needs to stay out of peoples lives PERIOD! They have ruined farming, and pretty much everything else they have ever jumped into the middle of with good intentions.
Todd, the credit card companies are legislated; JM, in my day, one got a check, didn’t report to an officer for cash, as I understand how it was once; Ryan, notwithstanding the “small amounts”, 400% APR is 400% APR, unconscionable, IMHO; yes, it is the consumer’s choice to use the services, but isn’t this indicia of the need to reexamine the minimum wage, among other things?
Ryan,
The problem is people are continuing to use them regularly. Many people get caught in the payday loan trap, not just military. I know too many people that have fallen for this trap, and they wind up paying that 400% because they cannot afford to pay off the loans, so they have to keep borrowing just to make the interest payments.
There used to be usury laws. Somehow they slipped away. Anybody know how that happened? Can we blame Jimmy Carter and his 21% interest rates?These payday/military/shaft the poor people loans and barely legal loansharking and the slimebags who own these businesses keep the vig as high as they can. Next, baseball bats to the knees.
are barely legal…
Dennis - no you can blame greed for the pay day loan companies. I think the banks are just mad because it is not them gouging everyone.
Dennis, there are usury laws still; rife with exceptions, etc., the old 10% rate hardly applies to anything under current statute. While President Carter was the fall guy for the 21% interest rates occasioned by ill-timed economic policies of the Nixon and Ford administrations (anyone still have their WIN button?), brought on by the “guns and butter” approach of the LBJ years, the increase in interest rates during his administration was, in fact, somewhat responsible for the changes in the usury laws. However, higher rates of interest (that is, over 10%) were already allowed in consumer credit transactions in Kansas (and, at the time, all other states save Arkansas), provided there was compliance with the Uniform Consumer Credit Code (in Kansas).
People should ask WHY the anti-usuary laws were repealed. People should ask WHY the government passed the new, evil bankruptcy laws! Here’s a hint; read the blasted TALMUD!
V.L.R.B!!
they are legal.
While I think some effort (state or whatever) should be done to prevent wild percentage rates I think the loans serve a purpose. As a retired military person I can tell you that while there are some aid avenues available you had better be prepared to disclose all your personal financial information to several people, be prepared to take counseling (regardless of what caused the financial need) and be prepared that it may have a negative impact on your promotion and award consideration. (and if you think that you will be having all these discussions without word getting out what your problem is to your coworkers and administration people in your unit you are living in LA-LA-Land).
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