Rant: pay day loans, modest needs, efunds
by Caleb Reading
It took Linda Medlock four years and $8,000 to pay off the $500 she borrowed from a payday lender to make her mortgage payment.
In what they say is the toughest crackdown on payday lenders in the nation, lawmakers want to cap the annual interest rate on payday loans at 36 percent and prohibit lenders from giving people with unpaid loans more money. Lenders would have to check a database to see whether customers are already in debt.
A trade association said the “payday lending reform act” is so strict, hundreds of lenders in Colorado could go out of business if it becomes law.
Lawmakers said the average payday loan in Colorado is $343, with average finance fees of $544. Lenders can charge $60 for a $300 loan for two weeks. The average annual interest rate for a loan in Colorado is 350 percent.
I think this is actually the scariest part of the whole article:
More than 70 percent of short-term loans went to borrowers with at least 11 loans in the previous year.
I regularly donate to modestneeds.org and sometimes I really wish the people asking for handouts for a “surprise” expense of something that shouldn’t be a surprise (i.e. car tags, car insurance, property taxes), would at least mention in their plea how they plan to start building an emergency fund or maybe just acknowledge that they know what an efund is, that such a concept exists and they have the mindset to keep themselves out of trouble in the future if they get a donation today.