An item on Obama's agenda

I still think that amount is way too high. Its even more than a credit card charges. I would like to see both credit cards and payday loans interest amount put down to 20% and under depending on your score.

actually in illinois the rate is 15.50 for every hundred borrowed.that should be the rate if pdl's should be allowed at all.by the way roadwarrior where ya been?

I doubt with two wars and an economic meltdown to deal with pdl's are going to be the first thing Obama rushes to do on January 21st. And even if he did there a lot of folks in Congress - not just including BUT especially Democrats - that are beholden to payday lending interests.

Frankly, I wish the politicians would quit playing hide the ball with interest rate caps. Either outlaw the product or come up with some sort of middle ground where well-regulated lending - in storefronts with annual state audits! - can occur.

The payday lenders aren't making it up - the product is so different from longer term forms of credit that it doesn't pay unless they can get at least $10-$15 per hundred. It costs Citibank over $100 in advertising costs to get one customer for their cards. But they'll make many times that in interest as long as the customer keeps the card. Payday lenders have to pay for advertising, employee salaries and rents too. But if we have real regulation - no endless refinances, mandatory paydown plans and safeguards against abusive collections - they need to charge enough to pay for those things out of one single payment.

So what am I getting at . . . either 1) say we're not willing to let people pay that price no matter what safeguards are put in place and outlaw single-payment loans altogether, or 2) allow a reasonable fee in exchange for greater regulation and accountability of the lenders.

I don't use pdl's anymore myself so I really don't care which way we go. I just think we should pick one or the other and resolve the issue once and for all.

Hey paulmergel! How are you?

i'm great warrior and you?

FreakyFriday-

I never suggested it was a priority. It's something He mentioned as an item on His agenda.

I didn't think you said it was, I was just expressing my own opinion that it would not be. I apologize for coming off as if you had said that.

courtney Love

FYI. There is a bill in the house to ban payday loans altogether. It will probably die if it has not already!

I am for this type of bill. Do you relize how many lives these payday lenders have ruined. I can not see why they would let them contiue to do business.

By the way, even $15.50 per $100 borrowed, assuming a two week loan, comes out to over 400% annual interest!

Unless the bill gets passed by the lame duck Congress and signed by Bush, it dies when the new Congress is seated in January. So far it hasn't even come up for a committee vote.

BTW - Alias is absolutely right that 15.50 per hundred would be over 400%. That's why of payday lending stays legal Congress should put caps on rollovers (most states already do) so they can't last a full year. With one rollover, the lender grosses $31. I think that on a per loan basis, that should be more than enough to cover the advertising costs, fixed expenses and wages paid while letting a lender make a reasonable (rather than obscene!) profit.