Payday loan law loophole swallows borrowers whole

This was, of course, totally predictable.

Look making money is the American way but taking advantage of people so you can become rich is wrong.

I actually knew someone in this business and they had a net worth in the hundreds of millions. Once I found out how they "earned" this money coupled with the selfish life-style I stopped talking to them.

I always thought this was called Loan-Sharking.
If government is supposed to help people that cannot help themselves, then simply place a cap the maximum APR.
I would say 100% max APR, with a 10% minimum payment, and $25.00 maximum late fee, is more than reasonable.
If these companies want to make more, let them go back to the illegitimate streets they came from.

Purely evil. This can so easily be outlawed.

Illinois has come a long way in helping their citizens become slaves to borrowers. At one time Illinois had a usury law cap on a loan of 12 percent. That was back when lawmakers used to use their office to protect their citizens from juice loans. Lawmakers have sunk to new depths allowing 403 percent. Time for a State Constitutional Convention to get rid of all state lawmakers and start from scratch.

Years ago when I first heard of Pay Day loans I said this can't be legal. Allowing this type of business to go on falls directly on our politicians. Maybe we need to check there investment portfolios.

It seems like a 400% interest rate is insane! Yet these payday lenders want no Cap. What did happen to the states usury law?

Like most issues with all the money pumped into campaigns by the pay day loan industry they have the politicians bought and paid for.

Hillary Clinton recently proposed a 30% CAP on credit cards. Nice these companies borrow money at 2 1/2 percent and charge you 30%+.... How about a CAP 10% above PRIME> That's more then adequate profit.

Thomas wrote:

It seems like a 400% interest rate is insane! Yet these payday lenders want no Cap. What did happen to the states usury law?
Like most issues with all the money pumped into campaigns by the pay day loan industry they have the politicians bought and paid for.
Hillary Clinton recently proposed a 30% CAP on credit cards. Nice these companies borrow money at 2 1/2 percent and charge you 30%+.... How about a CAP 10% above PRIME> That's more then adequate profit.

If that's more than adequate profit, that means there's an opening for a new business. Get some friends together, make a bunch of loans to poor credit risks at 15%, and let's see what kind of a profit you make.

Perhaps these people should save money for tuition and Christmas.

Legal Shylocks wrote:

Years ago when I first heard of Pay Day loans I said this can't be legal. Allowing this type of business to go on falls directly on our politicians. Maybe we need to check there investment portfolios.

who do you think is funding these politicians?- its called "lobbying."

Thomas wrote:

It seems like a 400% interest rate is insane! Yet these payday lenders want no Cap. What did happen to the states usury law?
Like most issues with all the money pumped into campaigns by the pay day loan industry they have the politicians bought and paid for.
Hillary Clinton recently proposed a 30% CAP on credit cards. Nice these companies borrow money at 2 1/2 percent and charge you 30%+.... How about a CAP 10% above PRIME> That's more then adequate profit.

You're not factoring in risk.

Here's another example of Blago's leadership. Failure to demonstrate any intelligence (as if he had any) to see the loophole in the short-term loan bill. This is just another prime example of Blago's inability to reason.

The only question I have for those who voted Blago into office is WHAT WERE YOU THINKING when you elected that ferret eyed piece of human waste?

Payday lenders and banks have no caps in many states, Wyoming included. Interestingly, federal credit unions, the only not-for-profit financial institutions, are capped, by federal law, at 18%

Thomas, if the government placed such a restrictive cap, as you suggest, of 10% above prime, you would see the credit market shrink up and fees skyrocket. No one scoring under 700 would get a credit card at all.

Predatory Capitalism on Steroids

OK so make the CAP at 20% above prime. What do you all think it should be whatever the market will bear? 400%, 800%, 1200%.

Whatever you can sucker some poor sap into signing up for.

If you read the article the pay day loan industry feels a 400% cap on interest is too restrictive.

Oh and as for suggestion that I get some friends together and start loaning out money. Under most state laws I would go to prison charging someone 20% interest on a loan.

Ron wrote:

<quoted text>
If that's more than adequate profit, that means there's an opening for a new business. Get some friends together, make a bunch of loans to poor credit risks at 15%, and let's see what kind of a profit you make.
Perhaps these people should save money for tuition and Christmas.

I would reather borrow from the mob,they would'nt charge as much as these guy,and they have an excellent profit margin. If a person is not going to pay back,they won't pay regardless of the interest.

In Illinois the usury rate of interest on a private loan is 9%. Put a VISA after that and the skies limit.

This sounds like legal loansharking without the breaking of knees.

Thomas wrote:

How about a CAP 10% above PRIME> That's more then adequate profit.

What are you willing to trade off?

I've never used a payday loan, and I personally think they are a really bad idea. But 10% above prime does not reflect the true cost of risk in lending to people with poor credit. Sure, you can cap rates, but the downside will be a lack of *any* option outside of the mafia for people who are high risk.

If that's an acceptable tradeoff, so be it.

I should clarify that the 10% was a cap on a credit card, not a payday loan. Which I understand if far more risky.

I am willing to accept the trade off that a lower cap will reduce the amount of pay day loans available. On a pay day loan I would say that mmmm, maybe 250% interest, 2 1/2 times the amount of money you lent would be a reasonable CAP.

I would absolutely prohibit continually renewing the loan, where you are just paying off interest.

As far as credit cards go 20 percent over prime is way more then adequate profit, even if it means you don't extend credit to bottom of the credit scoring scale.

Although if you asked credit card companies if they would rather take people with 700s or 600s scores, you would find far more going after the 600 crowd because they are the ones more likely to max there cards and only pay the minimum. Obviously you are going to get a higher default rate but that is still only 1 to 3 percent.

All you make on someone who pays off the balance every month is the merchant fees. Very small in the overall credit market.