Sector Snap: Payday lenders fall on Obama proposal

Most are probably already aware of this - but if not, see article below for info on possible cap on interest rates at 36%

forbes.com/feeds/ap/2009/01/07/ap5890148.html

Lesley, most store fronts are up front about fees/costs etc. It's the internet payday lenders that are overseas that's not. And I highly highly doubt that the payday lenders overseas are going to follow American laws, when they don't already.

Obama's campaign put out the statement 11 months ago. All that happened is one analyst cited it when he lowered one payday lender's stock rating and some investors panicked. Obama hasn't said a word about payday loans since last February and it isn't very likely he's going to convince Congress to pass a law which would shut down 22,000 legally operating stores and put over 100,000 workers on the street in this economy - especially when it won't affect the internet lenders at all.

I am sorry but these are the workers I don't mine be fired or laid off. PDLs are bad for people.

We are all entitled to our opinion, but your statement just baffles me. Since you are of the minority that had a bad experience with PDL's, you feel that all of the hardworking employees that work for legal lenders, pay taxes and participate in supporting the economy should be put on the "state's payroll"?

Based on FreakyFriday's numbers and I do not have a total number of employees for legal lenders, that would be the equivilent of walking into Microsoft and closing the doors one morning. Do you really think that the current economy could absorb that many unemployed workers? No, you, the tax payer, would immediately begin paying for thier unemployment benefits, health care and schooling.

The issue is not with the legal lenders, but instead it is the result of individuals getting on the internet and GOOGLEing "payday loans". The results will generally put the worst of the worst at the top of the list and create havac for the poor souls that borrow from them. If you read the posts on this forum, probably 98% have to do with illegal online lenders, not the companies that you want to put out of business.

Just as an FYI...

A recent study completed by the George Washington School of Business states 86% of the customers agree that payday loan companies provide a useful service to consumers. If all of the customers felt trapped and taken advantage of, this number would be a fraction of that.

I agree that something needs to be done with the illegal lenders, but it is impossible to control the internet.

Since we are going to quote that GWSoB they also reported that 64 percent believed that payday loan companies make it harder to get out of debt.

If anyone wants to read the entire report they can do so here.

pdlowner-
I have been reading your post the only question I have is do you honestly think that these loans are good for a short term loan. The question i have is how many of your clients come in and renew on a every 2 week basis. Now this is just my opinion but it sounds like to me that these loans are made for the client to never be able to pay off. For example a client comes into your store that is on a salaried income that does not change and takes a loan out, why in the world would you think that the client could actually pay it back. so then the client renews it again and again and again and then defaults on it. Now I do not think that all LEGAL payday companies should forced to close but there should be a cap on the APR. It seems to me that it will be impossible for a salaried person that takes one to ever be able to pay one off.

Do I hear the word "LOAN SHARKS" ? that's all this is. it is not about helping the poor folks that are behind on their mortgage and bills, they are here to make $$; make no mistake about it.

They are not a charity organization, they are NOT here to help you. use your better judgement and do your math before you sign your paychecks away forever.

decade of the capitalism, greed is the driving force of this nation now.

The Payday Loan business model is built on getting repeat customers who come in like clockwork to pay those rollover fees so they can get yet another payday loan. Works for the companies, but the customers fall deeper and deeper into debt--having to get just one more PDL and then just another PDL to stay afloat, until they wake up one morning and their entire paycheck has gone to fees.
This is the only way a PDL can stay in business, as those rollover fees are how they make their profit. It has to be. As to the 86 percent of customers who said in a recent study that PDL's were good? When a person is sucked into the cycle, they would say anything to keep it going--possibly they were desparate.
How else is a PDL going to stay profitable aside from rollover fees?

As my grand-daddy said... Figures don't lie, but liars can figure.

I love it!!!

PDL Owner..... the problem that I had (and all please know I am only speaking about MY personal experience not anyone else) is that I started with a legal storefront. In fact I adore the people that work there they are awesome... but what happened was I thought I could "pay down" so (for example) if I took out a $500 the next pay period I would only take out $450 etc....etc... until I could pay it off. Except when you are a single mom that lives paycheck to paycheck sometimes life doesn't always go as planned .... and as it turned out my child has "special needs" - and then the car broke and needed tires and etc...etc...etc.... so my "plan" didn't work and I ended up searching for legitimate loans on line which led to "cashcall" which led to an internet PDL's which led to this site because I became overwhelmed with fees etc,,,, from the internet ones. I NOW realize (thanks to this site) that the fees are technically illegal - and the store front one is on a payment plan and should be paid off soon... (Cashcall is just another issue I have to deal with for now) So it's not that PDL's in themselves are BAD... it's the cycle that those of us who are trying to stay afloat get into. My two cents anyhow.

tyleeash,

Before I start, I want to state that I am not trying to sound "holyer than thou" or demeaning, but I want to point out the facts in your post.

The biggest problem that I see in your post is that you are living beyound your means. This is not a situation that only you are in, a majority of people in this country have made the transistion in the last 20 years from saving for an purchase to immediate gratification. Just so that you know, I fit that profile also. We now must have all of the gadgets, the nice cars, cell phone, all of the cable channels and of course, the internet.

Now, based on living paycheck to paycheck, you voluntarily walked into a legal PDL store, had a pleasant experience with the process and staff, borrowed money and now blame them for your situation? You then went onto the internet and gave out all of your personal and financial information to some country that you have no clue where they are, if they are legal or if they are legtimate. This was the mistake that you made and the same one that many, many others have made.

Now, again I am using your post to make an example and not trying to pick at you. If you have not started a thread on the other PDL forum, please do. List your outstanding IPDL's, that amount that you borrowed and the amount that you have paid them. You will get lot's of help over there. As for Cash Call, this will be a tougher egg to crack. Depending on the CA, I do know that one group is settling for 50% of balance to provide a PIF.

tyleeash i do agree that starting a thread listing everything and everyone you owe will help you 100%. i have been through the payday loan cycle and understand where you are coming from. honestly i do not think anyone should ever get a loan - legal or not but i do agree with pdlowner that there are night and day differences between legal and illegal lenders.

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This is seriously something i have been trying to communicate to all my customers and colleauges outside of the industry. Love every bit of it.