Colorado debating limits on payday loans.

[donco6]

So the loan sharks are using a new tactic to make their case - "banks charge you more than we do."

"But payday lenders are gearing up for an alternative strategy. The industry believes it has found new support in arguing that payday loans, with annual interest rates that can reach 400 percent, are a cheaper alternative to overdraft charges. The industry is citing a recent USA Today analysis based on data from Moebs Services, an economic research firm. According to the analysis, consumers pay an overdraft fee of $26.68 every time they overdraw their account. So if consumers overdraw by $100, they’d pay an annual percentage rate (APR) of 696%, if the credit is paid back in two weeks – compared with an APR of 450% on a $100 payday loan with an average fee of $17.25, according to USA Today.

“The focus on overdraft protection on the Hill has helped legislators to understand that payday lending can be looked at as a cheaper alternative to overdraft charges,” said Steven Schlein, a spokesman for the Community Financial Services Association, the trade group for payday lenders."

http://coloradoindependent.com/39628/payday-lenders-prep-to-battle-reform-in-colorado

I had a huge argument on 9News site about how to calculate the interest on one of these loans, and he would NOT admit that their annualized rates approach 400%. I eventually called him a crook. Hope he doesn't send Guido to kneecap me.

[taught_me_patience]

1. I support payday lenders

if you look at their profit, it ain't that great.

[donco6]

2. I don't care about profit.

I care about the predatory, usurious rates they charge, and how a good portion of their clientele gets caught in a spiral of ever-escalating fees . . . even worse than credit cards. I hope we vote them out next fall.

[taught_me_patience]

6. I've read the Ernst and Young report

bad debt can be 30% of gross revenue. Profit is only 9% above the cost of capital... hardly exporbitant. Also, the article makes a good point, that for many, a payday loan at 15% is cheaper than an overdraft fee of $29. Payday loans can be very beneficial to the customer.

[Statistical]

3. If they can't make money at 150% to 400% interest they shouldn't be in lending business.

Payday loans = financial slavery.

Ban Em.

[JVS]

4. So does this mean that Payday lenders are going to turn into banks with lower check bouncing fees?

[SoCalDem]

7. Many payday lenders are PART of and OWNED by big banks

They may have started out as mom & pop loan sharks in strip malls, but these days, the big banks have "affiliated" with them.. :(

[taught_me_patience]

8. Eventually yes.

They will serve a purpose to drive down the fees at major banks.

[CBGLuthier]

5. I am not an evil bastard as I only took one testicle and half an arm

Parasites. This world needs a really good fumigating.