Payday Lending- A 400% Interest Debt Trap
Payday lending traps borrowers in long-term 400% interest debt, making them vulnerable to overdue bills, overdraft fees, credit card delinquency and bankruptcy. A 36% cap on annual interest springs the debt trap.
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One day a payday loan rep was pulled over by a police officer. When the officer approached his car, the payday loan rep said: “What’s the problem officer?” The police officer said: “You were going 65 miles per hour in a 35 mph zone!” The payday loan rep said: “That distorts the truth officer, I have only been driving for 10 minutes so how could I be going 65 miles per hour?”
Do you think he still got the ticket?
400%? You cannot put a weekly/biweekly loan on an annual rate scale, it just distorts the truth. By regulating the industry all that happens is payday lenders go out of business and other loans industries raise their prices leaving the consumers with fewer and more expensive loan options.
36% is still crazy high.
The payday lending industry spent almost 15 million dollars in an attempt to deceive AZ voters into thinking they were voting to reform. In the end, AZ voters were not the least bit fooled.