New payday loan rate cap takes effect

[unhappycamper]

New payday loan rate cap takes effect
By Karen Jowers - Staff writer
Posted : Monday Oct 1, 2007 17:44:23 EDT

A new law that caps interest rates on loans to service members and their families at 36 percent takes effect Monday, but consumer advocates say the real work is just beginning.

“There’s law, and then there’s compliance,” Jean Ann Fox, director of consumer protection for the Consumer Federation of America, told representatives of the Navy-Marine Corps Relief Society at its international conference in Potomac, Md.

Fox noted that the military relief societies are often the frontlines in helping service members who have fallen victim to predatory lending. “We need you to monitor what’s going on with the variations on the theme,” she told the group, urging them to let her know of any efforts to sidestep the new Military Lending Act.

“We can’t rest on our oars, because the predatory loan industry will find a way to manipulate around,” retired Adm. Charles Abbot, president and chief executive officer of Navy-Marine Corps Relief Society, told the group of representatives gathered from all over the world.

The Navy-Marine Corps Relief Society, National Military Family Association, Military Officers Association of America and others were among the groups that stood with national consumer advocates in supporting the legislation that limits the interest rate on small loans for military personnel and their families to 36 percent, among other things. Some lenders were charging 391 percent annual percentage rate or higher, when all fees were factored in.

“We’ve tried to do a good-faith job of using the experience of those we deal with every day to convey the difficult circumstances of sailors and Marines who got payday loans and made their situation worse,” Abbot said. “There were cases where it ruined families. We know legislation was an essential and necessary step. Education on its own was not going to do it.”


Rest of article at: http://www.armytimes.com/news/2007/10/military_paydayloans_071001w/

[NYVet]

1. 2 phase solution to this.

First phase.

Budget couseling for soldiers and their families as so that they can plan to live within their means. Many young soldiers get into debt because they are out on their own for the first time and are not financially savvy.

Second phase.

Local commanders need to find out who these companies are that are charging these rates and have their JAG departments speak to these companies to advise them of the Uniform Soldeirs and Sailors Relief Act when it comes to lending rates. If this does not resolve the situation, the commanders have the autorization to place a business off limits to service members.

[BOSSHOG]

2. The budget counseling and classes

are available to Sailors, (often mandatory.) I spent a great hunk of my time counseling Sailors about their fiduciary problems and yet they continually messed up. I lost more then one good Sailor because he had no concept of financial management.

PLACE THEM OFF LIMITS INDEED.