DIANE STANDAERT: From the data that we’ve seen, payday loans disproportionately are concentrated in African-American and Latino communities, and that African-American and Latino borrowers are disproportionately represented among the borrowing population.
To help government fight identity theft, the funding of terrorism and money laundering activities, and to help attempt to verify a customer’s identity, Lenders may obtain, verify, and record information that identifies the customer.
Standard service cash advances submitted and approved will be transmitted to your bank by the next banking day (this excludes weekends and bank holidays). If you request a standard payday loan from your lender you should receive the money the following banking day. Normally, loan requests receive Monday through Friday, will arrive at your bank the following day. Loan requests received on Friday will arrive on the following Monday (excluding holidays). If you request a standard payday loan on a Saturday or Sunday, you should receive the money on the following Tuesday.
Just be sure you have sufficient funds in your account on those days, otherwise you could face overdraft fees and other penalties from your bank. If you won’t be able to make a payment, please call us in advance at 888.801.9075.
WERTH: So far, so good. But I think we should mention two things here: one, Fusaro had a co-author on the paper. Her name is Patricia Cirillo; she’s the president of a company called Cypress Research, which, by the way, is the same survey firm that produced data for the paper you mentioned earlier, about how payday borrowers are pretty good at predicting when they’ll be able to pay back their loans. And the other point, two, there was a long chain of e-mails between Marc Fusaro, the academic researcher here, and CCRF. And what they show is they certainly look like editorial interference.
Even though their relationship starts with an actual emergency, as the book progresses, being emergency contacts starts to mean that they are each other’s default sounding board for the random stream-of-consciousness thoughts that cry out to be shared, even though they don’t need to be. Sam texts Penny asking for fashion advice; Penny texts Sam about how much she hates maraschino cherries. For the bulk of the book, Penny and Sam are not physically present with each other, but their relationship is built with the bricks of life’s minutiae, constructed line by line within the confines of their phones.
Last year the Consumer Financial Protection Bureau (CFPB) crafted a long-awaited rule on payday lending—the industry offering short-term loans that exploit poor consumers—to clamp down on fraud by forcing lenders to “reasonably determine that the consumer has the ability to repay the loan” (rather than defaulting or submitting to even more exploitative terms). The rule, spearheaded by the Obama administration and widely supported by consumer and public-interest groups, allowed exemptions for smaller-scale loans by requiring lenders to follow certain consumer-protection provisions rather than go through the “ability-to-pay” determination.
Payday lenders charge borrowers extremely high levels of interest which can range up to 500% in annual percentage yield (APR). Most states have usury laws that limit interest charges to less than approximately 35% however payday lenders fall under exemptions that allow for their high interest. Since these loans qualify for many state lending loopholes, borrowers should beware. Regulations on these loans are governed by the individual states with some states even outlawing payday loans of any kind.
WERTH: He was communicating with CCRF’s chairman, a lawyer named Hilary Miller. He’s the president of the Payday Loan Bar Association. And he’s testified before Congress on behalf of payday lenders. And as you can see in the e-mails between him and Fusaro, again the professor here, Miller was not only reading drafts of the paper but he was making all kinds of suggestions about the paper’s structure, its tone, its content. And eventually what you see is Miller writing whole paragraphs that go pretty much verbatim straight into the finished paper.
You can obtain your credit reports and credit scores for free, so use those options whenever you can. You’re entitled to your free credit reports once a year through AnnualCreditReport.com, and there are free services and tools out there that allow you to monitor your credit scores (Credit.com’s Credit Report Card is one of them).
DEYOUNG: If we take an objective look at the folks who use payday lending, what we find is that most users of the product are very satisfied with the product. Survey results show that almost 90 percent of users of the product say that they’re either somewhat satisfied or very satisfied with the product afterwards.
It’s our way of giving free debt advice online, to anyone who needs it. It’s a money management and debt solution tool that works out your options based on your budget. It’s quick, easy to use and you don’t have to give your name.
STANDAERT: These payday loans cost borrowers hundreds of dollars for what is marketed as a small loan. And the Center for Responsible Lending has estimated that payday loan fees drain over $3.4 billion a year from low-income consumers stuck in the payday-loan debt trap.
In another study, by Gregory Elliehausen, Division of Research of the Federal Reserve System and Financial Services Research Program at the George Washington University School of Business, 41% earn between $25,000 and $50,000, and 39% report incomes of $40,000 or more. 18% have an income below $25,000.
There’s no single reason payday lending in its more mainstream, visible form took off in the 1990s, but an essential enabler was deregulation. States began to roll back usury caps, and changes in federal laws helped lenders structure their loans so as to avoid the caps. By 2008, writes Jonathan Zinman, an economist at Dartmouth, payday-loan stores nationwide outnumbered McDonald’s restaurants and Starbucks coffee shops combined.
We understand how crucial it is to get the money you need, fast. You could receive an immediate decision* on your application and get funds delivered to your bank account as soon as the next business day.
Freakonomics Radio is produced by WNYC Studios and Dubner Productions. Today’s episode was produced by Christopher Werth. The rest of our staff includes Arwa Gunja, Jay Cowit, Merritt Jacob, Greg Rosalsky, Kasia Mychajlowycz, Alison Hockenberry and Caroline English. Thanks also to Bill Healy for his help with this episode from Chicago. If you want more Freakonomics Radio, you can also find us on Twitter and Facebook and don’t forget to subscribe to this podcast on iTunes or wherever else you get your free, weekly podcasts.
DUBNER: Well, Christopher, that defense sounds, at least to me, like pretty weak sauce. I mean, the university writing center doesn’t have as much vested interest in the outcome of my writing as an industry group does for an academic paper about that industry, right?
As for federal regulation, the Dodd–Frank Wall Street Reform and Consumer Protection Act gave the Consumer Financial Protection Bureau (CFPB) specific authority to regulate all payday lenders, regardless of size. Also, the Military Lending Act imposes a 36% rate cap on tax refund loans and certain payday and auto title loans made to active duty armed forces members and their covered dependents, and prohibits certain terms in such loans.
The “checks cashed” storefronts that line the main drags of poor communities across the country are largely linked to large banking monopolies, sucking assets from poor communities to pad multinational capital flows. According to the Center for Responsible Lending (CRL), average interest rates for payday loans are nearly 400 percent APR. The CFPB’s rule was long overdue, after five years of deliberations in rulemaking, during which the financial-industry lobbyists complained that it would ruin a system that was the only pathway to credit for 30 million consumers. But activists say that, instead of being “served” with deceptive financial predation, underbanked communities really need sustainable financial infrastructures that provide transparent, ethical loans that are structured for repayment, not usury. Many community groups have been promoting nonprofit credit unions and other community-based banking institutions, such as government-run public banks and postal banking, that allow poor households to build assets on equitable terms, and are trying to set new industry standards based on fair-lending principles.
Check `n Go currently operates in store locations in: Alabama, California, Delaware, Florida, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Mississippi, Missouri, Nebraska, Nevada, New Mexico, Ohio, Oklahoma, Rhode Island, Tennessee, Texas, Utah, Wisconsin, and Wyoming.
You know the drill by now: A runaway trolley is careening down a track. There are five workers ahead, sure to be killed if the trolley reaches them. You can throw a lever to switch the trolley to a neighboring track, but there’s a worker on that one as well who would likewise be doomed. Do you hit the switch and kill one person, or do nothing and kill five?
According to Amy Traub of the think tank Demos, “many advocates are worried that it’s the beginning of a larger effort to undo the CFPB’s successful work of protecting consumers.” The payday-lending sector has historically preyed on poor, “underbanked” communities, marketing short-term loans at astronomically high interest rates. Payday loans trade on exploitative debt schemes, as borrowers spiral into a deepening cycle of repeated over-borrowing and financial crisis. Historically, the industry has disproportionately targeted consumers who are extremely poor, black, recently divorced or separated, and renting their housing.
Lenders are within their rights to file reports with the three major credit bureaus—Experian, Equifax and Transunion—if you fail to repay your loan. This negative remark will lower your credit score and may make it impossible for you to obtain short term loans or other forms of credit in the future. However, once you have repaid your debt to your lender in full, this will be reported to the credit agencies and the negative remark will be removed from your credit history.
Over the last couple of years “payday” loans have become increasingly popular throughout the United States, including in the State of Texas. For a variety of reasons, the rates at which borrowers default on these loans is extremely high. If you have defaulted on a payday loan, or are concerned that you will default on one in the near future, you may be concerned that you will go to jail for not paying the loan. This is not true. You will not go to jail if you do not pay a “payday” loan.
The payday lending industry argues that conventional interest rates for lower dollar amounts and shorter terms would not be profitable. For example, a $100 one-week loan, at a 20% APR (compounded weekly) would generate only 38 cents of interest, which would fail to match loan processing costs. Research shows that on average, payday loan prices moved upward, and that such moves were “consistent with implicit collusion facilitated by price focal points”.
Which suggests there is a small but substantial group of people who are so financially desperate and/or financially illiterate that they can probably get into big trouble with a financial instrument like a payday loan.
When you add up the benefits of online payday loans and weigh the alternatives, it’s clear that payday loans can be a good solution for short-term cash problems. Still, only you can decide if a payday loan is right for you. Before making a decision, be sure to consider whether you can afford to repay a payday loan and its fees on time.
On the other hand, if you are considering taking out a payday loan, be sure to exhaust all other remedies available before moving forward. Payday loans are often accompanied by excessive finance charges and fees, which can get you deeper in debt if you repeatedly use them to bail out when financial emergencies arise.
Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as “targeted ads” in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.
RONALD MANN: I have a general idea that people that are really tight for money know a lot more where their next dollar is coming from and going than the people that are not particularly tight for money. So, I generally think that the kinds of people that borrow from payday lenders have a much better idea of how their finances are going to go for the next two or three months because it’s really a crucial item for them that they worry about every day. So that’s what I set out to test.
The bigger problem for payday lenders is the overhead. Alex Horowitz, a research manager at the Pew Charitable Trusts, says that on average, two-thirds of the fees payday lenders collect are spent just keeping the lights on. The average storefront serves only 500 customers a year, and employee turnover is ridiculously high. For instance, QC Holdings, a publicly traded nationwide lender, reported that it had to replace approximately 65 percent of its branch-level employees in 2014. “The profits are not extraordinary,” Horowitz says. “What is extraordinary is the inefficiency.”
A 2012 report produced by the Cato Institute found that the cost of the loans is overstated, and that payday lenders offer a product traditional lenders simply refuse to offer. However, the report is based on 40 survey responses collected at a payday storefront location. The report’s author, Victor Stango, was on the board of the Consumer Credit Research Foundation (CCRF) until 2015, an organization funded by payday lenders, and received $18,000 in payments from CCRF in 2013.
Other options are available to most payday loan customers. These include pawnbrokers, credit union loans with lower interest and more stringent terms which take longer to gain approval, employee access to earned but unpaid wages, credit payment plans, paycheck cash advances from employers (“advance on salary”), auto pawn loans, bank overdraft protection, cash advances from credit cards, emergency community assistance plans, small consumer loans, installment loans and direct loans from family or friends. The Pew Charitable Trusts found in 2013 their study on the ways in which users pay off payday loans that borrowers often took a payday loan to avoid one of these alternatives, only to turn to one of them to pay off the payday loan.
Because lenders do not typically run a credit check during the application process, the process of requesting a payday loan does not have an effect on your credit score. Instead, they inquire about your current employment status and source of income. Lenders also mandate that you submit a post-dated check to cover the amount of the loan once funds from your employer are disbursed into your account on payday.
Getting a short term loan starts with submitting the quick online form that we have provided. We will only ask you for the information we need to match you with a lender. We also protect your information with 256-bit secure SSL encryption technology so you can rest assured we are concerned about your privacy.
You are not culpable under criminal laws relating to returned payment items if you default on this transaction. Consequently, we may not use or threaten to use criminal process (e.g., criminal returned item laws) to collect a defaulted transaction.