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Dranoff pays off DRPA loan for Camden building

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Last updated: Tuesday, February 3, 2015, 1:07 AM
Posted: Monday, February 2, 2015, 4:59 PM

Developer Dranoff Properties has repaid a $3 million loan, with $1.28 million in interest, on the Victor Lofts luxury apartment building on the Camden waterfront, the Delaware River Port Authority said Monday.

The DRPA lent Dranoff the money in 2003 to convert the old Radio Corp. of America “Nipper” Building into 341 apartments.

The building was listed for sale last fall, but Carl Dranoff said Monday that his company might keep it.

“We’re considering our options to retain, refinance, or sell it,” he said. “It’s all still under consideration.”

The $3 million loan was part of the DRPA’s controversial “economic development” spending program, which funneled hundreds of millions of dollars into real estate, stadiums, museums, and other projects. The DRPA stopped making those grants and loans in 2011.

The U.S. Attorney’s Office in Philadelphia has been investigating the DRPA’s economic-development spending for nearly two years.

The Victor loan was to be interest-free until 2009, when Dranoff was supposed to start repaying it in monthly installments.

But the agreement with the DRPA stated that Dranoff’s obligation to make payments was limited to the Victor’s “available cash flow,” and Dranoff had not made any payments.

The repayment of $4.28 million announced Monday represents interest of about 3.9 percent a year over the 11 years.

“The loan was paid off on time with all interest, in accordance with the loan documents,” Dranoff said.

The money will be placed in the DRPA’s general fund, DRPA chief financial officer James White said.

In a related development, the DRPA said Monday that a $10 million loan guarantee made by the DRPA to the New Jersey Economic Development Authority in 2001 had been discharged.

That guarantee was part of a financial incentive package to retain L-3 Communications in Camden.

In December, the development authority sold the building previously occupied by L-3 to a private developer, allowing the DRPA to close the loan guarantee.

“Each of these transactions represents a significant step toward permanently concluding the authority’s involvement in economic development,” said John Hanson, chief executive of the DRPA. “Our sole focus is on our core mission – stewardship of important transportation services and facilities – namely our bridges and PATCO.”

The six-story Victor Lofts structure (not including its tower) is part of what little remains of a 58-acre industrial complex.

The building began as the headquarters of Eldridge B. Johnson’s Victor Talking Machine Co. in 1901. The company was sold to RCA in 1929, then morphed into a General Electric aerospace division in 1986.

The building then became the Victor, the commercial-and-residential venture owned by Dranoff Properties, in 2003.

More environmental cleanup is required at the 60,000-square-foot Building 8, another former RCA building awaiting redevelopment, Dranoff said.

No work will be done until additional financing is available, he said.


pnussbaum@phillynews.com 215-854-4587 @nussbaumpaul […]

China’s PBOC Braces for New Year Cash Demand With Loan Rollover

The People’s Bank of China rolled over a 269.5 billion yuan ($43.4 billion) lending facility to banks and added 50 billion yuan in loans as it seeks to ease liquidity ahead of the Chinese New Year holiday.

The facility, first issued in October with an interest rate of 3.5 percent, was rolled over to keep the money market stable, the central bank said in a statement on its official microblog account. It said the move also aims to smooth liquidity before the holiday, which begins Feb. 18.

The PBOC has sought to shore up liquidity and broaden stimulus efforts in recent months, cutting the benchmark lending rate in November and issuing billions of yuan in short- and medium-term loans to banks. Each year around this time, demand for yuan starts to spike as Chinese give each other red envelopes full of cash for the Lunar New Year holiday.

“There may be some irregular capital inflow and outflow around the world,” PBOC Governor Zhou Xiaochuan said at a World Economic Forum panel in Davos, Switzerland minutes after the central bank announcement. “That may also be a source of volatility.”

The PBOC doesn’t intend to provide too much liquidity, Zhou said in Davos.

China’s money-market rate climbed the most in a month today amid speculation banks will start hoarding funds to meet demands for cash. The central bank hasn’t conducted open-market operations since November. Last month, the PBOC reportedly rolled over part of a separate 500 billion yuan lending facility.

To contact Bloomberg News staff for this story: Xin Zhou in Beijing at xzhou68@bloomberg.net

To contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net Nicholas Wadhams

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[…]

A Path to Building a Better Payday Loan

What do payday, account-advance, bill-pay and auto-title loans have in common?

Three things, it seems: They’re underwritten to value collateral over cash flow; they’re designed to encourage repetitive borrowing; and their cost is so high, it’s as if the lenders want their borrowers — a demographic that includes recent college grads, working class and working poor — to default.

Collateral vs. Cash-Flow

Credit underwriting for traditional lending is governed by the 5 Cs of credit: capital, capacity, collateral, conditions and character. In a nutshell, capital represents financial worth — what you own versus what you may owe against that; capacity measures the extent to which you have enough cash running through your household to support the additional borrowing; collateral is the asset you agree to pledge in return for the financing you need to buy it (or, in the case of auto-title loans, the cash to pay your bills); conditions refer to the health of the economic environment in general and your ability to withstand changes to that; and character means credit history — in particular, how well you’ve handled however much of that you may have been granted in the past.

The question is, how should these Cs be ordered when a person’s credit is being evaluated for a loan? In particular, which should take precedence in the credit-underwriting process: excess cash-flow or collateral that’s anticipated to always be worth more than the loan balance?

Here’s a hint: Because these loan products are designed to appeal to borrowers who are short on cash, lenders that are interested in booking many high-priced transactions as fast as possible may be inclined to sacrifice capacity in favor of a bulletproof collateral position.

Repeat Customers vs. Repetitive Borrowing

If you had the chance, what kind of business would you prefer to run: One where your customers choose to work with you over and over again, or one where they have no choice but to do so? OK, let me ask that in a slightly different way: Which is more likely to stand the test of time?

Loan products that help borrowers to overcome financial difficulties or to take advantage of an opportunity are constructive. The companies that offer these are probably in it for the long run, too. The opposite, of course, is obvious — and unfortunate, especially for customers who are ensnared.

The culprit is an innovative group of specialty-finance products that are, in effect, “cash-flow accelerants.” Payday, bill-pay and account-advance loans are designed to make available today what would normally arrive tomorrow — less a healthy helping of interest and fees that are deducted from the loan’s proceeds. Consequently, consumers and small businesses that sign up for these may think they’re doing a one-time deal to get out of a tough spot, when in fact they’re setting themselves up for costly encores.

That’s because the full amount of next week’s payroll or next month’s accounts receivable now belongs to the lender, and the borrower is left with a cash-flow hole that’ll need to be filled with — you guessed it — another loan. That the APRs for these transactions often exceed triple-digits means that debtors will, over time, pay more in interest and fees than the value of the average loan they’ve taken out.

The High Price of High Risk

A fundamental truth of finance is this: The higher the risk, the higher the reward will need to be. But how high is too high, especially when the combination of rate and structure can mean the difference between successful repayment and default?

I ask because I worry about the destabilizing impact that costly loans can have on financially-tenuous households and small businesses — particularly those that resort to trading big equity positions for a modicum of cash, relatively speaking. Auto-title loans are a good example, not least because borrowers stand to lose that and more (when the car is repossessed) if they were to default.

Yet the lure of big profits is precisely why so much venture capital and private-equity money is flowing into this sector of finance. It’s also why investors clamor for shares of stock when these entities reach IPO size.

What Needs to Be Done

There’s been much talk about the plight of borrowers who’ve been victimized by certain of these products and the companies that offer them. Whether that leads to new legislation or added regulation to limit their more harmful aspects, such as that which the Consumer Financial Protection Bureau may be contemplating — a national usury limit that’s APR-based would be a great place to start — it’s important to understand and address the reasons why there is persistently high demand for these products: too little access to more fairly priced financing, inadequate financial-literacy education and growing wage disparity, for example.

In the meantime, it would help if the disclosures for these potentially hazardous specialty-financing products were as blunt as a surgeon general’s warning on a pack of cigarettes.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its affiliates.

More from Credit.com
The Truth About Payday LoansHow to Get a Personal Loan With Bad CreditHow to Shop for the Best Personal LoanFinanceLoans […]

Should Payday Loans Carry Warning Labels?

What do payday, account-advance, bill-pay and auto-title loans have in common?

Three things, it seems: They’re underwritten to value collateral over cash flow; they’re designed to encourage repetitive borrowing; and their cost is so high, it’s as if the lenders want their borrowers — a demographic that includes recent college grads, working class and working poor — to default.

Collateral vs. Cash-Flow

Credit underwriting for traditional lending is governed by the 5 Cs of credit: capital, capacity, collateral, conditions and character. In a nutshell, capital represents financial worth — what you own versus what you may owe against that; capacity measures the extent to which you have enough cash running through your household to support the additional borrowing; collateral is the asset you agree to pledge in return for the financing you need to buy it (or, in the case of auto-title loans, the cash to pay your bills); conditions refer to the health of the economic environment in general and your ability to withstand changes to that; and character means credit history — in particular, how well you’ve handled however much of that you may have been granted in the past.

The question is, how should these Cs be ordered when a person’s credit is being evaluated for a loan? In particular, which should take precedence in the credit-underwriting process: excess cash-flow or collateral that’s anticipated to always be worth more than the loan balance?

Here’s a hint: Because these loan products are designed to appeal to borrowers who are short on cash, lenders that are interested in booking many high-priced transactions as fast as possible may be inclined to sacrifice capacity in favor of a bulletproof collateral position.

Repeat Customers vs. Repetitive Borrowing

If you had the chance, what kind of business would you prefer to run: One where your customers choose to work with you over and over again, or one where they have no choice but to do so? OK, let me ask that in a slightly different way: Which is more likely to stand the test of time?

Loan products that help borrowers to overcome financial difficulties or to take advantage of an opportunity are constructive. The companies that offer these are probably in it for the long run, too. The opposite, of course, is obvious — and unfortunate, especially for customers who are ensnared.

The culprit is an innovative group of specialty-finance products that are, in effect, “cash-flow accelerants.” Payday, bill-pay and account-advance loans are designed to make available today what would normally arrive tomorrow — less a healthy helping of interest and fees that are deducted from the loan’s proceeds. Consequently, consumers and small businesses that sign up for these may think they’re doing a one-time deal to get out of a tough spot, when in fact they’re setting themselves up for costly encores.

That’s because the full amount of next week’s payroll or next month’s accounts receivable now belongs to the lender, and the borrower is left with a cash-flow hole that’ll need to be filled with — you guessed it — another loan. That the APRs for these transactions often exceed triple-digits means that debtors will, over time, pay more in interest and fees than the value of the average loan they’ve taken out.

The High Price of High Risk

A fundamental truth of finance is this: The higher the risk, the higher the reward will need to be. But how high is too high, especially when the combination of rate and structure can mean the difference between successful repayment and default?

I ask because I worry about the destabilizing impact that costly loans can have on financially-tenuous households and small businesses — particularly those that resort to trading big equity positions for a modicum of cash, relatively speaking. Auto-title loans are a good example, not least because borrowers stand to lose that and more (when the car is repossessed) if they were to default.

Yet the lure of big profits is precisely why so much venture capital and private-equity money is flowing into this sector of finance. It’s also why investors clamor for shares of stock when these entities reach IPO size.

What Needs to Be Done

There’s been much talk about the plight of borrowers who’ve been victimized by certain of these products and the companies that offer them. Whether that leads to new legislation or added regulation to limit their more harmful aspects, such as that which the Consumer Financial Protection Bureau may be contemplating — a national usury limit that’s APR-based would be a great place to start — it’s important to understand and address the reasons why there is persistently high demand for these products: too little access to more fairly priced financing, inadequate financial-literacy education and growing wage disparity, for example.

In the meantime, it would help if the disclosures for these potentially hazardous specialty-financing products were as blunt as a surgeon general’s warning on a pack of cigarettes.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its affiliates.

More from Credit.com
The Truth About Payday LoansHow to Get a Personal Loan With Bad CreditHow to Shop for the Best Personal LoanFinanceLoans […]

Economics Daily Digest: Regulating payday loans, a hopeful look at …

By Rachel Goldfarb, originally published on Next New Deal

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

Roosevelt Institute Fellow Saqib Bhatti’s proposal to allow the Fed to lend directly to municipalities is one of many ideas you can vote on in the Progress Change Institute’s Big Ideas Project. The top 20 ideas will be presented members of Congress. Voting ends on Sunday, January 11. Click here to vote!

CFPB Sets Sights on Payday Loans (WSJ)

Alan Zibel reports on the Consumer Financial Protection Bureau’s plans to explore creating new rules to regulate predatory payday lending, the first such rules on a federal level.

Consumer-advocacy groups say the loans are deceptive because borrowers often roll them over several times, racking up fees in the process. They also criticize high annual interest rates that can range from less than 200% to more than 500%, depending on the state, according to research by the Pew Charitable Trusts.

Early this year, the CFPB plans to convene a panel of small lenders to discuss its payday-loan plans, according to the people familiar with the matter. The bureau, like other federal agencies, is required to consider input from small businesses if regulations being developed are likely to have a significant impact on them.

Follow below the fold for more.

Signs of Economic Promise Are Offering Some Hope for the New Year (NYT)

Rachel Swarns reports on the positive signs that some are seeing, including new jobs for long-term job seekers and raises and more hours for workers at retail chains like Zara.

Don’t Believe What You Hear About the U.S. Economy (AJAM)

Dean Baker says it’s not yet time to celebrate an economic comeback. Growth is still slow enough that the labor market won’t reach pre-recession numbers by the end of 2015.

Why the Democrats Need Labor Again (Politico Magazine)

Timothy Noah interviews Thomas Geoghegan on his new book, which he describes as a “last-ditch effort for the Democrats” to revive the labor movement and win elections.

California Colleges See Surge in Efforts to Unionize Adjunct Faculty (LA Times)

Larry Gordon speaks to adjunct faculty at some of the private colleges in California that are seeing union organizing on campus for the first time.

Austerity’s End Strengthens U.S. Recovery (MSNBC)

Steve Benen corrects Grover Norquist’s attempt to give Republicans credit for economic growth, pointing to small increases in public spending as proof that austerity didn’t fix anything.

The Five Major Things We Screwed Up in Inequality in 2014 (The Guardian)

Suzanne McGee’s list includes the minimum wage, which she says needs a boost at a federal level, and race and economic opportunity, an issue she says we practically ignored.

[…]

There Are More Payday Lenders in US Than McDonald's – NBC News

There are more payday lenders in the U.S. than McDonald’s or Starbucks, reflecting economic conditions in which fast money is even more important than fast food.

Payday lending, in which users pay a fee for what amounts to an advance on their paychecks, has blossomed over the past 20 years. There are now more than 20,000 across the country, according to the St. Louis Federal Reserve, while McDonald’s boasts 14,267 locations.

They’re used most often by people who lack access to ordinary credit—often those at or near the bottom of the economic spectrum, with nearly a quarter living on public assistance or retirement income.

While the loans can fill a need for fast cash, they also can become a way of life for users who end up paying effective annual percentage rates, or APRs, well in excess of 300 percent.

Consequently, they’ve attracted the attention of regulators, politicians and economists why worry about those left behind in a decidedly uneven economic recovery.

“A large number of Americans are literally living paycheck to paycheck. They’re one unplanned expense away from being in financial distress.”

“A large number of Americans are literally living paycheck to paycheck,” said Greg McBride, chief financial analyst at Bankrate.com. “They’re one unplanned expense away from being in financial distress.”

McBride cited some sobering statistics: Twenty-six percent of Americans have no emergency savings and 41 percent say their “top financial priority” is simply staying current with their expenses or getting caught up on their bills. This is occurring even as the financial headlines trump new stock market highs by the day and President Barack Obama’s administration touts the U.S. economic recovery.

“Americans that have assets have seen the value of those assets appreciate, but Americans who don’t have those assets, they’re not feeling the recovery in their pocketbooks, particularly at a time of stagnant income,” McBride said. “If you don’t have those things, and you haven’t seen a pay increase, then you’re no better off, you’re no wealthier.”

Finding Themselves Poorer

Those using payday loans, in fact, may find themselves poorer.

The mean, or typical, payday borrower makes $22,476 a year and paid $458 in fees. However, a quarter of those borrowers paid $781 or more in fees due to repeat usage, according to the Consumer Finance Protection Bureau, which is closely monitoring the approximately $50 billion industry and will likely put forward more regulation.

About 48 percent of borrowers had done 10 transactions in the CFPB’s time sample, and 14 percent had more than 20 transactions. The median borrowing amount was $350, for a 14-day term. Median fees for $15 per $100, which computes to an APR of 322 percent.

In all, consumers using payday loans were on the hook to their lenders for 199 days, or about 55 percent of the year.

“It appears these products may work for some consumers for whom an expense needs to be deferred for a short period of time. The key for the product to work as structured, however, is a sufficient cash flow which can be used to retire the debt within a short period of time,” the CFPB wrote in a 2013 report studying the payday proliferation.

“However, these products may become harmful for consumers when they are used to make up for chronic cash flow shortages,” the report continued. “We find that a sizable share of payday loan and deposit advance users conduct transactions on a long-term basis, suggesting that they are unable to fully repay the loan and pay other expenses without taking out a new loan shortly thereafter.”

A year ago this month the bureau began accepting consumer complaints and received thousands soon after, according to the St. Louis Fed, which in its own recent report cited the potential for payday loans to “become a financial burden for many consumers.”

Payday lending is allowed in 36 states, and fees are lowest in the states that regulate them.

Bankrate’s McBride cautioned, however, that excessive regulation could be problematic if it ends up denying cash-strapped consumers who can’t get conventional loans or credit cards access to emergency funds.

“That’s a double-edged sword,” he said. “In some ways it can benefit consumers but in some ways it can hurt consumers. Limitations on how often that borrowed amount can be rolled over could keep consumers from falling into a bottomless pit of debt. But there’s certainly a fine line. These services exist because the demand is so high. The reality is a lot of Americans need short-term credit.”

First published November 24 2014, 12:16 PM

[…]

Russia Cash Squeeze Gets First Test Today in Loan Auction

Russian policy makers’ latest bid to shore up the nation’s currency sounds complex but is actually simple: They will take rubles out of the hands of banks.

Fewer rubles means bankers will have less cash to buy dollars. That in turn will stem the selloff in the ruble. Or so goes the argument. On day one, the plan — or at least the unveiling of the plan — worked. The ruble surged 1.7 percent yesterday to 45.8525 per dollar, rebounding from a record low even as policy makers simultaneously took other steps to allow it to trade freely.

More from Bloomberg.com: Predictors of ’29 Crash See 65% Chance of 2015 Recession

The risk is that the strategy could deepen the economy’s slump. Just as bankers will have fewer rubles to buy dollars, they will also have less rubles to lend to companies and consumers, choking off credit in an economy already on the verge of recession amid the strain of international sanctions tied to the Ukraine conflict. The Bank of Russia is offering the least seven-day loans, or repos, in a month at an auction today.

“This is the right thing to do,” Paulo Vieira da Cunha, a former Brazilian central bank board member who is now the chief economist at hedge fund Ice Canyon LLC, said in a phone interview from New York yesterday. “They could squeeze domestic liquidity, but if it’s too hard, some of the firms and banks will go under. I am not sure they are willing to pay the price.”

More from Bloomberg.com: China to Debut Fighter Jet as U.S. Brass Attends Airshow

New Policy

In announcing the policy change yesterday, central bank Governor Elvira Nabiullina revealed few details, saying only that she will limit ruble funding to squeeze speculators betting against the currency. The comments come 10 days after Nabiullina raised the benchmark lending rate 1.5 percentage points to 9.5 percent, showing that she is relying more on monetary tools to defend the ruble.

Previously, the policy had been based more on selling dollars and euros to meet Russians’ demand for foreign currencies, a strategy that has triggered an $83 billion drop in the country’s international reserves this year. The ruble’s 29 percent decline since the end of December has added to inflation pressures, spurred capital outflows and made it more difficult for Russian firms to pay back foreign-currency debt.

More from Bloomberg.com: Buffett Said He Paid a Lot. $15 Billion Later, BNSF Is a Cash Machine. ‘He Stole It’

The central bank said yesterday that it will stop selling $350 million daily to support the ruble when it falls beyond its trading band, moving toward a free-floating currency. Policy makers reiterated that they still could intervene in the foreign-exchange market if they deem it necessary to preserve “financial stability.”

‘Painful Measure’

While Nabiullina didn’t elaborate on her plan, Danske Bank A/S and Renaissance Capital Ltd. said the central bank will probably curtail the amount of rubles offered to lenders through repurchase auctions and currency swaps.

At the last offering of week-long repurchase agreements, or repos, on Oct. 31, lenders borrowed 2.85 trillion rubles ($62 billion), up from a nine-month low of 1.83 trillion on Sept. 30. At today’s auction, the central bank is making 2.7 trillion rubles available.

In a repo operation, the central bank buys securities such as government bonds from lenders for a set period, temporarily raising the amount of money available in the banking system. Forcing the banks to return the money at maturity, rather than rolling it over into a new repo, would leave them with less cash in their coffers.

“We consider this as a potentially painful measure,” Oleg Kouzmin, an economist at Renaissance, said by e-mail. In the worst case, it may result in a shortage of rubles in the domestic money market, Kouzmin said.

Putin Speaks

Russia’s central bank has struggled to stem the ruble’s decline as fighting flares anew in Ukraine and crude oil, a major export, trades at a four-year low.

The ruble, which traded 0.7 percent lower at 11:43 a.m. in Moscow, fell 8 percent against the dollar last week and is the world’s second-worst performing currency this year after Ukraine’s hryvnia, according to data compiled by Bloomberg. Russia’s currency is heading for the worst year since 1998, when the country defaulted on $40 billion of local debt.

The selloff has no fundamental basis and volatility will ease as the central bank steps up the fight against speculation, President Vladimir Putin said yesterday at the Asia-Pacific Economic Cooperation summit in Beijing.

While the ruble’s slump helped boost inflation to a three-year high of 8.3 percent last month, the depreciation has benefited state-run energy exporters, who get their revenue in dollars and have mainly ruble-based costs. That has helped the government boost its budget surplus by 70 percent in the first nine months.

Preserving Reserves

“Putin wants the ruble to be weaker, though not to an absurdly low level,” Jean-David Haddad, a strategist at OTCex Group in Paris, said by e-mail. “Only a weaker ruble can partially offset weaker oil prices.”

Policy makers last week brought forward plans for a free-floating currency after a larger-than-estimated interest rate increase on Oct. 31 failed to halt the ruble rout.

The previous policy required the central bank to buy rubles every time it weakened beyond a prescribed trading band, a predictable system that drained reserves and spurred traders to bet on further weakness.

The central bank last week restricted those interventions to once a day, before abolishing them entirely yesterday. It will now intervene in the market with undisclosed quantities to defend against “threats” to financial stability.

“This is a central bank looking to preserve its foreign-exchange reserves as a priority,” Tom Levinson, the chief currency and interest rates strategist at Sberbank CIB in Moscow, said in e-mailed comments. By keeping the ability to sell foreign currency unannounced, “it is accepting elevated volatility, but not persistent extreme volatility,” he said.

To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net; Vladimir Kuznetsov in Moscow at vkuznetsov2@bloomberg.net

To contact the editors responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net; Nikolaj Gammeltoft at ngammeltoft@bloomberg.net Daliah Merzaban, Alex Nicholson

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Payday loan industry defends its practices in Calgary as city considers restrictions

Stan Keyes, the head of a Canadian payday lenders association, says a push by city councillors for tighter restrictions on the industry in Calgary to reduce poverty is uniformed and misguided.

“It’s easy to say they take advantage of people,” Keyes said. “The truth is that among other small credit options … a payday loan might be the smartest option. These loans are less expensive than a series of overdrafts or defaulting on an auto loan or mortgage.”

At Monday’s council meeting, Brian Pincott, Druh Farrell and Andre Chabot will introduce a motion that calls on a clear definition of “payday loan businesses,” for bylaw amendments to prevent clustering of payday businesses and for higher licensing fees.

The motion says payday loan businesses and other “fringe financial lenders,” such as pawnbrokers and cash-for-gold operations, thwart poverty-reduction efforts by municipal and provincial governments.

“They rely on repeat customers. They encourage repeat loans,” Farrell said Sunday. “Often if people are unable to pay back the loan they encourage them to renew the loan and those are at usury interest rates.”

The motion follows recommendations made last June by a Calgary social services agency for the city to adopt stricter regulations on the payday loan industry.

‘The Real Cost of Payday Lending’ report by Momentum Community Economic Development said consumers should be adequately shielded through regulations and for governments, financial institutions and non-profits sectors to fill the void created by tighter rules.

“Consumers should be able to access it at a reasonable annual rate of interest,” said the report.

Canada’s Criminal Code allows for loans up to $1,500 for a maximum 62 days and caps the annual interest rate of 60 per cent. However, provinces can circumvent that cap and allow payday lenders to charge higher, annualized, rates.

Alberta, for example, allows payday lenders to charge up to 23 per cent interest on the principal amount.

Momentum said the provincial government should repeal the Alberta Payday Loans Regulations and adopt the Criminal Code’s maximum rate.

“(Payday lenders) are focusing on neighbourhoods where they can exploit the residents that can live there,” Farrell said. “We need people living in poverty, low-income wage earners to have more stable financial practices.”

Keyes dismissed the suggestion the payday loan industry targets low-income people, saying the businesses are often in walkable corridors and in stripmalls near banks.

He said the payday loan industry would welcome traditional financial institutes introducing similar short-term, small sum loans because the consumer would benefit from more options.

“The repercussions of putting too many restrictions on our industry could result in the industry in saying, ‘We’re scaling back,’ ” he said. “Where does that put the consumer? Going to unregulated, unlicensed online lenders is a real threat right across Canada today.”

Keyes hoped to speak on behalf of the industry at an upcoming SPC planning and urban development meeting later this month.

thowell@calgaryherald.com

Twitter@TSHowell

[…]

Pensacola leads state in Payday loans | Rick's Blog

Image Burningmoney-150x150.jpg


Greater than one-in-three payday loans made in the state of Florida are done in the Pensacola, according to a study by the Research Institute on Social Economic Policy at Florida International University. Florida’s payday lending industry is a $2.85 billion business.

“The region with the greatest number of payday loans was Pensacola, with Miami and Orlando in distant second and third place, respectively,” reported RISEP. “The Pensacola metropolitan statistical area has a population of about 455,000 compared to Miami’s regional population of 5.7 million. However, the Pensacola region was home to 39.9 percent of all Florida payday loan transactions in 2012 while the more populous Miami accounted for 17.8 percent of payday transactions.”

Another horrible statistic for our community to lead the state.

The size of the payday lending industry is driven by “loan churning” as borrowers renew loans or take out another loan within days of paying back a loan. According to the report, the lenders charge an average annual percentage rate (APR) of 280 percent for a two-week loan. The typical payday lending customer uses 25 percent of their biweekly grow income on payday loans.

The Community Enterprise Investments, Inc. is partnering with the Raise Florida Network, Zion Hope Primitive Baptist Church and Friendship Primitive Baptist Church to host a town hall meeting Payday Lending on Aug. 28 at Zion Hope. I will post more information closer to the date.

Post Published: 13 August 2014

Author: Rick Outzen

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Are you presently in some kind of economic clutter? Do you need just a couple one hundred dollars to help you get to the up coming income? Payday cash loans are available to help you the money you require. However, you will find issues you must understand before you apply for starters. Follow this advice to assist you make good choices about these personal loans.

These loans are made to be repaid in close to 14 days. Nonetheless, points do take place and if you cannot pay the money-back promptly, don’t get afraid. You might be able to have an extension about the bank loan however it will cost much more.

Think meticulously about what amount of cash you need. It really is luring to acquire a personal loan for much more than you need, nevertheless the more money you may ask for, the greater the rates will probably be. Not merely, that, however, some businesses may possibly very clear you for any certain amount. Go ahead and take least expensive sum you need.

Think twice before you take out a cash advance. Irrespective of how a lot you think you want the cash, you must learn that these loans are very expensive. Naturally, in case you have not one other way to place food on the dinner table, you should do what you are able. However, most payday loans end up pricing men and women twice the amount they lent, when they pay for the loan off.

Search for distinct financial loan programs that may are better for your personalized scenario. Because pay day loans are gaining popularity, loan companies are indicating to offer a bit more versatility with their financial loan applications. Some businesses offer 30-time repayments as opposed to one or two several weeks, and you might be eligible for a staggered repayment schedule that can have the financial loan much easier to pay back.

Just before finalizing your payday advance, read through all of the small print in the contract. Online payday loans may have a lot of legitimate language invisible within them, and in some cases that legitimate words is commonly used to mask concealed costs, substantial-priced later fees and other things that can eliminate your pocket. Before signing, be smart and understand specifically what you are actually putting your signature on.

Keep in mind the deceiving charges you happen to be provided. It might seem to get affordable and suitable to become charged fifteen dollars for each and every one particular-100 you borrow, however it will quickly accumulate. The charges will convert being about 390 percent from the volume obtained. Know just how much you will be necessary to spend in fees and fascination up front.

Often be honest when implementing for a mortgage loan. These loans are designed with individuals with lower credit rating in your mind so there is absolutely no need to artificially enhance your information. It is going to damage your odds of obtaining any potential loans once you falsify these documents and are found.

If you are having concerns paying back your payday advance, allow the loan company know at the earliest opportunity. These loan providers are utilized to this case. They could deal with you to develop a continuing repayment alternative. If, as an alternative, you ignore the lender, you will discover oneself in choices in no time.

Payday loan creditors must be registered. Every state has financing legal guidelines that are different from other states when it comes to getting lawful and legit lending options. Which means that status accreditation is important.

Ensure you have a near vision on your credit track record. Aim to examine it a minimum of annually. There might be irregularities that, can drastically problems your credit score. Possessing poor credit will negatively impact your interest levels on the payday advance. The more effective your credit score, the low your monthly interest.

Once you obtain a pay day loan, pay attention to the quantity of interest charged. A lot of creditors will plain inform you the things they charge however some loan providers cover this info. When you make application for a financial loan, generally take into account the interest and figure out just how much it will be worth for yourself.

Reduce your utilization of payday cash loans to unexpected emergency situations. It can be difficult to repay these kinds of higher-interest rates promptly, resulting in a poor credit rating routine. Usually do not use online payday loans to acquire unneeded things, or as a technique to getting extra money movement. Stay away from these pricey personal loans, to protect your month to month expenses.

Generally bring identification and proof of earnings or job when it is time to try to get a pay day loan. To fill out a cash advance application, you have to present evidence that you will be at least 18 plus your earnings is continuous.

If you have gainful job and require dollars very quickly, a pay day loan can be worth considering. In spite of high rates of interest, payday advance may still be a huge help if carried out sporadically and smartly. Keep your assistance in the following paragraphs in mind and find out how use a payday loan for the advantage.

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