Jun 4 2011
Pay Day Loans: Nevertheless Right For Kentucky
The CFSA encourages responsible lending and borrowing
According to Kevin Borland of the Kentucky chapter of the Community Financial Services Association of America, the truth that online payday loans will live on in the state after House Bill 182 failed to install a 36 percent APR cap is an affirmation of customer freedom of choice. He writes in a Lexington Herald-Leader op-ed that this battle for freedom of choice sits at the heart of nearly all arguments for the short term loans industry. Article resource – Right for consumers to choose preserved in Kentucky by MoneyBlogNewz.
House Bill 182 stopped for a while
While free market capitalism carried the day in a close 13-10 vote against Kentucky House Bill 182, opponents of payday cash advances insist that they will regroup and re-introduce the same bill in 2012. Such stubbornness illustrates how much Kentucky activists misunderstand online payday loans, writes Borland. There is very strict payday lending laws in the state. Payday lenders can’t charge interest at all. There is a specific definition of it in Kentucky. It is called a product that is single-payment and fee-based. Borland suggests that the opposition’s use of Annual Percentage Rate as a yardstick is “an attempt to trick legislators and the public” into thinking that short term installment loan pricing is exorbitant. Dependent upon the lender, it is just a 15 to 25 percent fee in a flat fee of $15 to $25 on every $100 loaned.
Listening to from CLOUT
The Citizens of Louisville Organized and United Together (CLOUT) and the Kentucky Coalition for Responsible Lending (KCRL) supported House Bill 182, as did the AARP. The installment loan market has banks and credit unions in them, funded by CLOUT and KCRL that compete. CLOUT and KCRL can be attacking payday loan lenders like this while the competition hands over money. It is good for competition in the free market without this additional bit of bribery though. This involvement shouldn’t be there’s a disclaimer at the very least. Borland says this is very essential. The payday advance company has AARP as a competitor directly. Chase Financial is used as a charge card. Borland states that AARP members have a higher rate of interest on their money advances.
Financial choices made by consumers
While payday cash advances may not be ideal for every financial scenario, they can be the least costly option available, particularly among credit constrained customers. According to Borland, KCRL, AARP and CLOUT all thing short term loans are harmful. They should then look for alternatives. The truth that those organizations do not do so may suggest the attacks are all bark and no bite.
Articles cited
CLOUT Funding
cloutky.org/page3/page3.html
KCRL Coalition
kyresponsiblelending.wordpress.com/coalition-membership/
Lexington Herald-Leader
kentucky.com/2011/04/11/1704022/consumers-won-with-defeat-of-payday.html
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