May 11, 2016

Payday Loans


    The city of Montgomery and the State of Alabama have grappled with the issue of those ubiquitous lending "stores", where people with lesser credit ratings can get money in advance from their next paycheck...or a loan based on the value of their car (in some cases, they are actually selling the car, with the right to buy it back..,just like  pawn shop transaction.)
     The best Montgomery could do is limit new locations, ruling they can not be within so many feet of another store. That, of course, protects the turf for the existing stores but does nothing to protect the customers who can be charged interest rates in the hundreds of per cent.
     Now Google is taking a stand against them, refusing to run ads for them on its vast online empire. Of course Google is not blocking folks from using the search engine to find the stores.
     I just did and here is the rundown on a payday loan interest charged at one big chain:

Payday Loan 14-day APR Range: 391.07% - 664.29% APR varies per state regulations.

    There are no state regulations in Alabama, so you can bet the interest rate will be on the high end of that high scale. 664.29% Really?
     Frankly I'm not sure what the answer is, other than having some practical limits on APR's. Geez, can't we agree on something in the 200% range? Isn't that more than enough?

1 comment:

Jay Croft said...

Nope. Nothing is "more than enough" to these predatory sharks.

I know an elderly couple in Montgomery who lost their car and then their house to one of these nefarious businesses.