Payday Lending Part 2: A National Debate

17.06.11

National research by the Center for responsible lending (LCR), a financial watchdog group, noted that high percentages of people who take payday loans are often caught in a cycle of debt.

A report of the LCR called "Payday Loans, Inc.: Short on credit, on long-term debt" has found new customers for payday loans are indebted by an average of 212 days during their first year of use payday loans. The report followed 11,000 for the first time borrowers over two years in Oklahoma.

In addition to data from Oklahoma, the CRL also analyzed data from Colorado and Florida, and the data supplemented by interviews conducted with borrowers in New Mexico and California. The conclusion of their report said: "The typical payday borrower's remaining debt payday loan for much of the year, and many borrowers are liable for payday loans for periods even longer."

The data used in the report notes that 75.9 percent of borrowers took out 12 or less ready to Oklahoma a year, but 24.1 percent took out 12 or more per year between 2009 October-November 2010.

In 2006, after many members of Congress were briefed on the soldiers fall into traps of debt payday adopted the Law on military loans. This legislation established a maximum rate of 36 percent for members and their families in April.

"I saw soldiers who were to pay in financial difficulty, terribly vulnerable, and ready to sign anything to get a few dollars," said Senator Jack Reed, during a Senate hearing on the Act military loans, "And I think that this behavior, if it is targeted to exploit the troops, is absolutely wrong ... a cap of 36 percent, I think it's more than reasonable."

Rep. Frank Ferri (D-Warwick) said that payday loans have received a special exemption laws of Rhode Island in 2001 loans because they were supposed to be different from normal bank loans, but new research has shown that they have an adverse effect.

Source: Patch.com