.

The Truth About Payday Lending

Payday Lending Facts From a Former Employee

As the legislative session kicks off this year, there are several key issues that will be addressed. One of the most pressing of those issues, is the issue of payday lending.

Payday lenders offer short-term loans called cash advances, or payday loans. In theory, the idea of borrowing some quick cash when one needs it, sounds like a good idea. The only problem is, it doesn't work that way. I know, because I was a payday lender. I was also a customer.

It works like this. A financially-strapped customer walks into a payday loan center. He provides some basic personal information, and a personal check. The lender offers a loan, based on the customers gross income, and then the customer writes a personal check for the amount borrowed, plus a fee of $10 for every $100 borrowed. The customer is given a due date two to four weeks in the future, when he must return with his payment of the amount borrowed, plus the fee. At that point, his check is returned to him and the loan is closed. Sounds like a done deal, right? Not exactly.

The truth is this. Ninety to ninety-five percent of payday loan customers continue to borrow and re-borrow, and in many cases, it goes on for years. They simply pay one loan, and then take another one out for the same amount right on the spot. In the end, consumers pay thousands of dollars in payday loan fees, for something they'd be better of without. In fact, I can't think of any other "product" that is more useless than the payday loan.

Payday lenders also charge an APR of 260% for their loans. Yet, they will tell you not to pay attention to the APR, since their loans are short-term and fee-based, and shouldn't be subjected to annual percentage rates. Then why in 2007 did Congress make payday lending to members of the military illegal? Because they deemed payday lending "a threat to our national security."

Thirteen other states have already outlawed this predatory form of lending, and now is the time for Rhode Island to be the next state to ban this ridiculous practice. If not, these out-of-state and out-of-country lenders will continue to make huge profits at the expense of decent, hard working Rhode Islanders.

What you've read is the truth about payday lending. Don't believe the industry's lies and rhetoric. The time is now for payday lending reform in Rhode Island.

Stephen V. Martino

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Jack Baillargeron February 12, 2013 at 09:24 PM
Forgot to add Ted that I am retired and care for a 100% disabled person 24 hours a day, so yep lot of time to be on line. PS. As I have been told many a time ( Jack you have no clue on how to be pithy lol)
Ted Geisel February 12, 2013 at 09:32 PM
Come on now Jack, you know we have been talking about the US Constitution here.
Jack Baillargeron February 12, 2013 at 09:46 PM
Ahhh contrare Teb, No State Constitution can have anything the does not conform to the US constitution though can it lol. We are a "Representative Republic" with a guiding principle and law of the US Constitution, and nothing can violate that unless it is Unconstitutional correct? So anything that is a Constitutional law is within the scope and purview of the US Constitution and therefore one and the same. If someone disagree's with the Constitution there is a little thing in the 1st Amendment that allows redress to change it. So it matters not what law is passed or Constitution in any State as long as it conforms to the US Constitution it is the same as the law of the land. Though I will admit not all States are required to follow every States laws, because of States rights. We however are talking about every single State that has a mandate for Education, which also happens to be, well all 50 of them ;-}.
Jack Baillargeron February 12, 2013 at 09:49 PM
On the other hand Ted I am taking a nap and will dwell on your response later if I have the time lol.
Jennifer May 15, 2013 at 12:57 PM
I know that some payday lenders charge just crazy interest rates and simply get their consumers into the debt. But on the other hand, why people complain but proceed using this service if it’s so predatory and expensive? It’s because they believe that it’s possible to be in debt, have a low credit and continue borrowing money. Payday loans are easy to get and I think it’s the main reason why so many consumers use them. But there are many alternative lending options, today’s lending market offers a variety of different loans. It’s not worth to get a loan just because it’s easy. I understand that many people can’t make ends meet and take out payday loans because there’s no way out but what do they expect then? If you have serious financial problems, debts and low income then payday loans will not help to change your life into the better. This service is intended for emergencies and it’s worth to apply only if you need to borrow small amount of money for a couple weeks and you are sure that you’ll be able to pay back. Jennifer Williams from http://northenloans.ca/cash-advance-online.html

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