Tag Archive | Payday loan

Strange and Long Trip of Payday Loan Providers Through 2017

An air of uncertainly loomed over the short-term lending industry, especially payday loan as it became clear that the CFPB was going to finally release their proposed list of regulations for the short-term lending industry as a whole. The regulations brought about some real changes – strict analysis of borrower’s ability to repay loans, individual loan payments per day must be limited to a level that did not cause any financial trouble, lenders need to allow borrowers to reborrow instantly and in the event that there is insufficient funds to repay the loan, lenders can make an attempt to directly debit payments from the accounts of the borrowers.Banks Being Scrutinized By Regulators for Payday-Like Loans

The new regulations did not go further.

Supporters of the regulations argue that the rules are only an attempt to protect the consumers from getting caught in the debt trap. Critics, however, are of the opinion that it restricts the customers’ access to credit and funds. Caught in between both the groups is payday lending consumers.

Who is a typical payday loan borrower?

Non-PaymentAs per the Pew Charitable trusts, typical payday lending customers are white women between the ages 25 and 44. Payday lending providers helps millions of Americans find a quick solution to their financial bind. It offers them access to credit and they can use that money to take care of their pressing needs before the next paycheck.

In the absence of short-term lending, where will the customers go?

It is difficult for high-risk customers to obtain loan from traditional financial institutions. There is often pressure on banks and other large financial organizations to wiggle their way out of having to offer any kind of loan to risky borrowers. Even though Richard Cordray, director of CFPB, thinks that small banks and credit unions will be able to offer loans at reasonable rates, it is not entirely true. The high rate of defaulters often makes these agencies pull the plug on offering loans. To them, short-term lending is unprofitable and too risky.

Some supporters of CFPB even suggested that Post Officers can act as short-term, low-cost lenders. However, there are strong arguments against Post Offices functioning as banks. This is because it has never been the purpose of the Post Office. So, consumers practically have nowhere to go if the payday lending industry is forced out of business.

Some options for payday lenders to consider

There are innovators who offer software solutions that can help payday lenders to tie into their POS and verify the borrowers’ status, amount, loan term and interest rare as per the state usury laws. This technology exists in 16 states and in such states, there is no abuse of the system.

Alternatives to payday lending have been dreamed of, such as Cumulus launched in 2016 at the Innovation Project. But, nobody knows how these solutions are going to function in the brand new regulatory system.

One thing is for sure that payday day lending is a very simple issue, but it does not have a simple solution. This is because lending to a class of borrowers with a history of not repaying loans is not easy. So, it is no feasible to offer them short-term loan at low rates of interest.

The payday lending industry heavyweights are of the opinion that destroying small-dollar loans would cause millions of Americans a lot of problem. They might not even be able to manage their day-to-day expenses. Payday loan is something that a lot of Americans depend on. In a utopian world, it would have been easy to give our small-term loans at very low interest, but it is not realistic.

Revamped Payday Loan Regulations under review

As the 2016 summer weather has continued to heat up so, too, has the drama surrounding payday loans, car title loans and other types of alternative financial services. From the most popular news websites to popular talk shows, payday loans are being discussed quite a bit. Why so much attention right now? Because in June the Consumer Financial Protection Bureau (CFPB) officially published its proposed rule to regulate payday loans, title loans and other types of alternative loans. The CFPB has even asked the public for feedback on the proposed rule.Banks Being Scrutinized By Regulators for Payday-Like Loans

Financial experts have even been tasked with looking the rule over and letting the public know what they think about it. Though payday loans have been a hot topic, financial experts have repeatedly stressed that the general public still lacks a fundamental understanding of payday loans, and the alternative financial services industry in general. Being as most media pieces on payday lending rules seem to be centered on the CFPB, it is easy to understand why some people tune out when they hear this topic being addressed. Understanding the new rule, what the CFPB is trying to do and how the payday lending industry could be affected by the rule are all things that American consumers should pay closer attention to.

The CFPB is officially recognized as an ‘administrative agency. What the heck does that mean? Essentially, an administrative agency is a lawmaking organization that specializes in a particular area. For example, the Environmental Protection Agency is one such agency that makes laws related to the environment, and the IRS (boo!) is the best known administrative agency related to revenue processing. The CFPB is a relatively new administrative agency. It was created as part of Dodd-Frank back in 2010. The Bureau was given the power to make laws related to consumer financial issues. It does this by creating rules. Once those rules get finalized they become federal law. The public is being given the opportunity to review the rules the CFPB creates, and we can also comment on any proposed rules. The official name of the newest rule is the “Payday, Vehicle Title and Certain High Cost Installment Loans” rule. It proposes to implement new consumer “protections” that the CFPB states will prevent consumers from getting into long term cycles of debt.

It is important for people to check out the rule and provide feedback. This is especially true for people who operate payday lending locations, work at them or enjoy having the ability to take out the types of loans that they want to. The proposed rule is currently available to look at on the CFPB’s website. Be warned, though, like other laws and federal rules, the new rule is very wordy and reading all of it could take a good chunk of time. Don’t let that dissuade you from at least giving it a look and deciding for yourself what you think about the proposed rule.

Going online for most folks may be more about checking out news sites and social media sites, but that doesn’t mean that you shouldn’t take a bit of time out of your day to check out important stuff, like this proposed new rule. A lot of opponents of the CFPB have accused the agency of running roughshod as of late. Looking at the new rule and then finding out what opponents of the rule believe will help you to be better informed about this important topic. Just because an administrative agency has the power to do something that does not necessarily mean that it should. Take a look for yourself and let the CFPB know what you think.

Are Payday Loans really the Debt Traps they are made out to be?

When you’re poor you don’t have the same kind of options that other folks have when it comes to borrowing money. As a matter of fact, there really aren’t many lending options that are currently available to lower income Americans. One type of lending that has been helpful to poorer people over the years may soon wind up going away forever. The Consumer Financial Protection Bureau (CFPB) has created new rules that may prevent poor people from getting access to short term lines of credit. And these rules were created because the CFPB says it wants to get rid of “debt traps” that are caused by the payday lending industry.

About Payday LoansBanks Being Scrutinized By Regulators for Payday-Like Loans

The payday lending industry really started to take off in the 90s. Most folks have seen the small storefront locations that these lenders use as their base of operations. The lenders provide small dollar loans (usually for just a few hundred dollars) to their customers. The customer pays back the loan in a week or two and is charged a flat rate fee that must be paid back in addition to the money borrowed. It is typical for payday lenders to charge about $15 for every $100 a person borrows. So, if someone takes out a $200 payday loan, they must pay the lender $230 after the two week loan term is up. Pretty easy to understand, right?

The CFPB doesn’t think that process is very simple or easy to understand. In fact, they seem to believe that American consumers are so dumb that they couldn’t possibly understand and abide by those types of loan terms. That is why they have amped up their efforts to effectively eliminate the payday lending industry. They are looking to implement their proposed rules on a federal basis, so all the states have to fall in line with how the CFPB wants to regulate this industry.

One problem is, however, that individual states have already been doing a pretty good job of regulating the payday lending industry without eliminating the industry altogether. This doesn’t appear to be enough for the CFPB, though, as they have been pushing very hard to get their new rules implemented as soon as possible.

The New Rules

The CFPB wants to make lenders assess whether or not a borrower can pay back loans prior to the loan being made. They also want to make it more difficult for people to roll over old loans into new ones. If these rules become the law of the land, they will certainly shake up the payday lending industry. But that might not be a good thing after all.

We have to use critical thinking here to figure out why people take out payday loans. They do so because they need access to fast cash. Many of these people have low credit scores and/or very little access to traditional banking services. These folks have the same types of emergency expenses that everyone runs into from time to time. But without a lot of cash on hand or the ability to borrow from banks/credit card companies, they instead turn to payday lenders. The bottom line – people take out payday loans because they need to. They have no other avenues to pursue when they need emergency money. If the CFPB’s new rules drive thousands of lenders out of business we could potentially see millions of American households left with no option available to them at all when they need to take care of emergency expenses.

This is just another example of people/organizations saying they have someone’s best interest at heart, but really doing nothing more than making life more difficult for that person. Without payday lenders to turn to when hard financial times hit, poor people may wind up with nowhere else to turn than illegal (loan shark) lenders. That certainly isn’t the kind of outcome that anyone wants to see take place.

New Limitations on what Debt Collection Agencies are allowed to do

There could be no national economy without debt. Owing money is one of those things that is just a part of life. However, personal debt can get out of control and people may find it difficult to pay back the money that they owe to creditors. This is where debt collection comes into the equation. And it turns out that the people of this country are having some very big problems with debt collections companies. There are over 6,000 of these companies in the country and some of them use aggressive collections tactics in order to reclaim money that people owe.

There have been so many complaints about debt collections companies that the CFPB is proposing new rules that are designed to help bring this industry under control a bit, while providing some much-needed relief for American consumers who are struggling with repaying their debts.credit card debt

There are more than 130,000 people who work in the debt collection industry and those folks bring in over $13 billion each year. This industry has become more complex over the past few years. Some creditors will sell outstanding debts for pennies on the dollar. Third party debt collection firms purchase these debts and often use some very shady tactics to get their job done.

Chiming in on the current state of debt collections in the United States the CFPB Director, Richard Cordray said, “Often debt collectors are motivated to go to almost any lengths to try to extract as much as they possibly can from the debtor. This is because they are typically paid based on the amount they collect, the relationship may be fleeting, and the more distant risk of being called to account later may not outweigh the immediate urgency of getting paid today.”

If Cordray and the CFPB get their way, here are some of the things debt collectors will not be able to do in the future:

  • Collect on debts that do not exist. Some consumers have been hit up by debt collectors for money that they don’t even owe. This happens sometimes due to error and sometimes due to fraud on the part of debt collections companies. The CFPB has proposed that collectors will have to verify that a debt exists prior to beginning any collections actions.
  • Demanding payment without letting consumers know their rights. Debt collectors often rely on using confusing statements when they contact people. Debt collections companies will often only let people know their rights via cryptic, legalistic language the most people cannot understand. The CFPB wants to make these types of communications more transparent and easy to understand for consumers.
  • Endlessly harassing people to repay. Some collections agencies will call and even email people non-stop. They seem to think that the more they annoy people the more likely it is that they will be able to collect. The CFPB has proposed that limits be put on how many times debt collections agencies are allowed to make contact with consumers. The proposed limit is 6 times per week that agencies are allowed to contact people. This applies to phone calls, email or even letters sent to people.

The best way to avoid the hassles of dealing with debt collectors is to avoid getting in so much debt that you cannot repay what you owe. However, sometimes that is impossible, and sometimes you may not even really own money, but still wind up getting hassled by debt collectors. These new limitations should help people to avoid the potential nightmare that can happen when dealing with the worst kinds of debt collections companies.

Payday Lending Limitations may leave Borrowers out in the cold

Canton, Ohio is a city that is very much a typical American town. There are about 73,000 people living in Canton. It is also known for being the home of the Pro Football Hall of Fame and is known for having a thriving art scene in the downtown area. You may not know it, but Canton is also a city that serves as the nerve center of the payday lending industry. These smaller dollar loans allow people to borrow money for emergency expenses and to pay the lending company back a few weeks later. There are a lot of lenders in Canton, and a lot of people who regularly borrow money from these lenders.

Tanya Alazaus is the manager of a payday lending store in Canton. During a typical business day she sees a lot of regular customers and works hard to make sure that people get the financial services and products that they need to get by. Alazaus is a lot like any business manager or owner, and she works hard to make sure her customers get great service. It is her job. One that may be in danger if new payday lending limitations get put into place.unsecured-loans-can-be-easily-obtained-through-payday-lenders-direct-6516

Federal regulators are on a mission to crack down hard on businesses just like the one that Tanya manages. They consider payday lenders to be predatory and are coming up with new regulations that will likely lead to a serious decline in the overall volume of loans given each year. Additionally, the new payday lending regulations will probably force thousands of lending locations to close their doors for good.

The main agency that is working hard to over-regulate the payday lending industry is the Consumer Financial Protection Bureau. This agency has drafted new rules for payday lenders that will lead to greater overhead costs associated with providing loans, and that will put a cap on how many loans people are allowed to take out over the course of the year. These two repercussions alone are likely going to spell disaster for small lending companies, like those that help to prop up the economy in Canton, Ohio.

Many lenders are worried about what will happen to their customers if they are unable to get payday loans in the future. Ms. Alazaus said, “My customers look forward to being able to walk in here for their short-term needs. They would rather use us than things like credit cards, and most don’t even have the ability to use those.”

Ohio is a state that has some of the highest per-capita payday lending usage in the country. It is a state with more payday lending locations than it has McDonald’s franchises. There are already at least 14 states that have banned payday lending altogether. Ohio may soon join theses states in restricting payday loans completely. Factor that in with the federal regulations that the CFPB has been proposing, and it is easy to see the writing on the wall.

No one from the regulatory side of the house, though, seems willing to admit that imposing strict regulations on payday lenders is really going to only punish lower income American consumers at the end of the day. These are the people who depend on payday loans the most, and many of them have no alternative lenders to turn to when they are in need of emergency cash. If states, like Ohio, restrict payday lending, consumers are sure to suffer and people are going to needlessly lose their jobs. Makes you wonder just who the CFPB and other groups against free market concepts are really trying to protect.

 

Payday Lending Restrictions will harm Lower Income American Households

It is no secret that the mainstream media and some government watchdog groups seem to loathe the payday lending industry. If you believed everything that got reported on this industry, you might think that there is no reason for it to be in existence. However, that would fly in the face of the fact that millions (some say 10 to 12 million) of people every year rely on payday loans. The Consumer Financial Protection Bureau recently proposed some rules that they say will help to protect consumers from the potential pitfalls of payday loans. Opponents of payday lending have applauded these new rules, but the elephant in the room is the fact that the new rules may wind up hurting the very consumers that they were supposedly created to protect.Banks Are Offering Payday Loan Type Services

The CFPB has never come out and demanded that the payday lending industry go away completely. But the new rules are based on extensive underwriting for the loans; essentially forcing lenders to do extra leg work to make sure that consumers are able to pay back the loans that they take out. The additional checks and balances that payday lenders will have to go through in order to make loans will likely result in many of them being unable to afford to stay in business.

Some crafty investors are working on their own versions of payday loans to swoop in and snatch up their share of the growing number of people who demand short term, small dollar loans. Uber recently announced that it will allow its drivers to get payday advances of up to $1,000 against their paychecks. The money will be paid back directly from the drivers’ pay checks. And Uber is not the only company that is cooking up new ways to offer services that look a heck of a lot like traditional payday loans.

The CFPB has done what the government is known for doing from time to time. They have stepped in to put new regulations on an industry that is already undergoing massive transformations. And if the CFPB gets its way, the new rules will more than likely limit the options available to poor people. All the while similar financial services and products will become more available to middle class households. It is a reversal of fortunes that should never take place, and one that could have lasting negative impacts on lower income households for decades to come.

The CFPB has come right out and said that the new rules will raise costs for lenders and that they will ultimately lead to a reduction of total loan volume by more than 50 percent. So, the money that would have been lent to lower income consumers (higher risk borrowers) will more than likely end up in the wallets of people who have higher incomes (lower risk borrowers.) Anytime an aspect of lending is regulated the lenders will react by enacting new prices in their loan contracts. They have to account for the increased risk/cost somewhere, right?

They say that bad things tend to roll downhill. The poor in this country know this fact all too well. Unfortunately, it is usually the government who is causing the lack of fortunate financial circumstances that millions of people must contend with. The new rules being proposed by the CFPB are just another example of how a government agency can act on the “behalf” of a group of people and wind up making things even worse on that group of people in the process.

Consumer Financial Protection Bureau looks to be Further Complicating Consumer Complaint Process

It looks like the CFPB is looking to add another layer of complexity to its customer dispute/complaint process. When this change goes through, consumers will have to wade through a two part online process that will ask consumers to give a rating to how a company handles complaints and to even log a wordy description that supports their dispute.

The CFPB is looking to get comments from the public about a recent request that came in as part of the Paperwork Reduction Act. This request would give people the chance to submit feedback on how the companies they are logging disputes against handle complaints internally. The Bureau plan on doing this with the addition of a survey and a free text section which allows consumers to describe their experience prior to the closing of a complaint.Consumer Financial Protection Bureau

The agency gave notice of this the first week of August. As of now, it is being called the Company Response Survey. It is slated to take the place of the dispute function that is currently in use and allows people to submit positive or negative feedback while they are filing complaints. The feedback will be looked at and any personal information will be removed prior to it getting officially published on the complaint database that the CFPB currently oversees.

This survey will ask consumers to rate how the company handles complaints via a one to five scale, while also including an opportunity for people to describe why they are giving the rating that they are. The CFPB published a Federal Register notice that stated, “Positive feedback about the company’s handling of the consumer’s complaint would be reflected by both high satisfaction scores and by the narrative in support of the score. Negative feedback about the company’s handling of the consumer’s complaint would be better supported and more useful to companies than the current ’dispute’ function.”

The CFPB will share the performance feedback information with the companies that respond to complaints to defend/represent its complaint handling process. Additionally, the CFPB will use this information to provide information to enforcement, supervisory and regulatory work that has a relation to the consumer financial products and services industry. The CFPB said that this survey is building on the foundation of a request that was submitted in 2015, and that it will allow the agency to stay centered on “… ways to highlight consumers’ positive experiences with financial service providers.”

The original CFPB consumer complaint database was launched to the public in 2012. The Bureau officially added complaints about debt collection to the database the following year. In the summer of 2015, they added complaint narratives to the growing database. This feature lets consumers share the experiences that they have had by using their own words. Since the database has been publicly available, debt collection companies have been the entities that seem to respond to the most complaints quickly. The CFPB published data that indicated that debt collection companies responded to about 93 percent of complaints logged in a timely manner.

It is worth noting that mortgage company complaints and complaints about credit card companies have made up a bulk of the consumer disputes received so far. Alternative financial service complaints have been few and far between. This is worth being aware of, being as the CFPB has seemed to focus a lot of its efforts on policing providers of alternative financial services, when it seems to be the traditional financial institutions that have generated the most complaints from consumers since the official launching of this database.

How to get a Quick $500 for a Casino Trip with your Buddies

Every once in a while you just have to get out with the buddies. And if you are serious about having a good time, you know there is nothing like heading out for a road trip to the casino. Whether you head out to Vegas or keep your trip more on the local side of things, you know that great times await when you and some of your best friends have a night/weekend of gambling and fun. The bad thing is, though, that you cannot head out the door for one of these trips without a little bit of cash in your pocket. Many guys find that they are flat broke when these types of trips are scheduled to take place, and often don’t know what to do.

Fear not! You don’t have to miss out on all the good times that are sure to happen when the next casino trip rolls around. We’ve put together some tips that will help you to get $500 or so for a great time with your crew…Casino

One option is to use a website or local reseller to sell off some of your seldom used belongings. Find that you don’t get to play golf all that much these days, and willing to part with that old set of clubs? You may find that a local sporting goods reseller in your area is willing to give you a bit of cash to take them off your hands. Have electronics or other stuff to sell? You might want to use eBay or even Craigslist to create a quick, 2 day sale.

The downside with these methods is that you will often only get pennies on the dollar from your initial purchase price. A reseller might only give you $20 or $30 for a set of clubs that you paid hundreds for, and online auctions can often not pan out as you might expect. Still, though, if you have a bunch of stuff you don’t mind getting rid of, and don’t mind taking less for them than they are worth, this is a valid way for those of you who need a quick $500 for a trip to the casino with your buddies. But you may have to sell of quite a bit of stuff in order to make that much money.

Another Method for a Quick $500 for a Casino Trip

If you don’t feel like conducting a fire sale on all of your best stuff in order to make the casino trip, you might want to consider getting a payday advance loan. There are a lot of people who deride these types of loans, but the fact of the matter is that these loans are often the best way to get quick cash for emergencies. And getting out there with your buddies for some gambling qualifies as an emergency in this case.

Payday lenders usually charge about $15 for every $100 you borrow. They get paid back two weeks after you get the loan. So if you’re short on cash because you’re between paydays at work, you get to pay the loan back once that next check is in the bank. So, you could potentially borrow $500 and pay back $575 in two weeks. These types of loans give you cash with a time buffer, so you can not worry about paying them back until you have your next check from work. For those seriously looking for how to get a quick $500 for a casino trip with buddies, the simple payday loan may be the easiest way to get it done.

Think about these options, and the next time you need cash in order to have a bit of fun with your friends, you at least now have a couple of options that may work out quite well for you.

Opposing Views Clash over the Legitimacy of Payday Loans

To say that viewpoints are polarized these days would be an understatement. On just about every subject imaginable – from pop music to politics – people have opinions. And often, the opinion that someone has on a topic puts them in direct opposition of the folks who don’t share that opinion. One only has to look at how Democrats and Republicans usually face off on various topics in order to understand how all of this works. Keeping in mind how people tend to cling to their opinion, and write off people who are on the opposite side of the fence makes it easy to understand why payday lending is such a hotly debated topic.

On one side you have consumer advocates and others who are opposed to payday lending. They believe that payday lenders charge too much for their services and that the lending companies play a part in trapping their customers in cycles of debt. On the other side, there are payday lenders, their customers and those who support this industry. The lenders are business owners that believe they offer valuable services to consumers that are underserved by traditional banks. The customers are people who need access to fast money, and who have turned to payday lenders for these services. And the supporters of this industry come from a wide range of backgrounds, with most of them sharing a strong belief in offering choice to consumers and the American entrepreneurial spirit.unsecured-loans-can-be-easily-obtained-through-payday-lenders-direct-6516

The Biggest Threat to Payday Lending

You can choose to be on either side; that’s one of the great things about this country. But there is one group that is the biggest advocate of eliminating payday lending completely – the Consumer Financial Protection Bureau (aka the CFPB.) This government group is in charge of protecting consumers from financial misdeeds and shady business practices. And while they certainly do that, the CFPB has been on a serious quest to rid the country of payday lending and other forms of short term loans that operate outside the realm of traditional banking. The CFPB is currently poised to unleash new, stricter regulations that many believe will ring the death knoll for the payday loans industry.

Surprising Support for the Payday Lending Industry

For a while, it seemed like only a handful of elected Republican officials had an interest in protecting the payday lending industry. However, in recent months key Democrat leaders have stepped up and joined in bipartisan steps to help delay/prevent the new CFPB regulations from taking effect. Many people believed that the payday lending industry was as good as done for until officials from both sides of the aisle began to talk common sense about the issue and started working together to formulate legislation that would work to stop the CFPB from enacting its new regulations. This is still a work in progress, but it demonstrates that even those who tend to lean toward liberal political affiliations can have a change of heart. As to where these bipartisan efforts will ultimately lead is something that everyone will have to keep an eye on in upcoming months.

The debate about payday loans will likely continue regardless of whether or not the CFPB is successful in implementing its new regulations. However, for those that ardently support a free market, choices for American consumers in the financial market and the ability for low income consumers to get access to short term, small dollar lines of credit, the hope is that bipartisan efforts to quell the CFPB turn out to be successful.