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A Look at the Status of the Payday Loan Sector | NationofChange

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For commentators on the payday loans sector, these have had a busy few months with new initiatives and regulation. The payday industry has been a hive of activity. Here we take a look at the goings on and implications for the industry and consumer.

Industry Initiatives


As a response to asking MPs not to bracket all payday loan customers as needy or vulnerable, payday lender Wonga has published OpenWonga. This site provides data about Wonga customers which includes:

? why they borrow;

? how much they borrow;

? the length of a loan;

? where they live;

? a typical customer profile including age, martial stats and any dependants.

They also have a news and view sections. Here they publish comments and share feedback from their customers.


One of the major breakthroughs the industry hopes to have solved is that, up until recently, credit files took a long time to update. This has meant that borrowers could in effect apply to multiple lenders in a short amount of time and even with credit checks, the other activities would not be registered as they were not showing on their credit file (which can take up to 28 days to update).

This has led to many people falling into debt with payday loans by having multiple interest and fee charges which has then spiralled them further into debt. While this is really an issue of customers “gaming the system” rather than a seedy practice of lenders, the industry hopes the launch of MODA, will remove this from continuing.

MODA will provide real time access to payday loan applications across a number of the larger lenders at 15 minute intervals. This will hopefully mean that multiple applications across several lenders will stop. This in itself will go a long way to prevent people going into debt. It will also help with the stricter regulations we discuss below.


Financial Conduct Authority (FCA)

The new consumer credit watchdog the FCA has taken little time to publish new rules for the industry which came into force on the 1st July 2014.

The rules include:

? adding financial health warnings on all emails, online ads and texts;

? signposting people to free debt advice;

? more stringent affordability checks to make sure borrowers can make repayments;

? clearer display of fees and costs associated with failure to repayment a loan in full and on time;

? the restriction of roll overs. The industry had a self suggested maximum of three but the regulator has made this two;

? the freezing of interest and fees if the customer rolls over more twice;

? restrictions on the use of Continuous Payment Authorities (CPA) to recover owed monies from a borrower’s account.

There have been a number of lenders that have pulled out of the market due to the regulation, so the regulator hopes this will remove the rogue elements.

There is still further legislation planned as the Chancellor has tasked the Authority to devise and implement a structure for a total cost of credit cap in the hope to further protect customers.

Competition and Markets Authority (CMA)

The CMA is the replacement organisation for the old Competition Commission, who were tasked with looking at the competitiveness of the payday loan market. They reported their preliminary findings in June this year and some of the highlights included:

? the lack of an independent price comparison website for payday loans meant that customers were paying more than they should for short term finance;

? publishing an independent price comparison website;

? clearer, upfront notification of borrowing costs if a loan is not paid back on time or in full;

? recommending that brokers who pass leads to payday lenders are more transparent as to how their service operates and the fees they charge for their service.


The hope is that with clearer regulation, consumers will be both educated about the pitfalls of loans and at the same time be offered better regulated finance products which will clearly highlight any fees.

In the future, a price comparison site could help save the consumer money as they can easily shop around to find the most cost-effective loan. It is clear at this stage that the Government are not trying to legislate the industry out of existence, but to clean house. After all, there is still huge demand for short term finance and without a payday loan industry, it is hard to see where people will turn to for help. There may be other options but none seem to have the same level of investment or appetite to lend.


Western Crop Producers Have More Time to Repay Cash Advances

OTTAWA, ONTARIO–(Marketwired – Jul 10, 2014) – Agriculture and Agri-Food Canada

Producers who have been unable to sell their crops due to rail transportation challenges now have more time to repay their 2013 cash advances under the Advance Payments Program (APP). Agriculture Minister Gerry Ritz today announced a Stay of Default on the repayment of advances for producers who received an advance on their 2013 crops through the Canadian Canola Growers Association (CCGA).

The six-month Stay of Default, which extends to March 31, 2015, was granted at the request of the CCGA to provide producers with more time to repay their outstanding advances. Producers will also have the option to repay their APP advances in cash without penalty. Technical changes are also being implemented to make it easier for all producers to repay their advances by allowing them until the end of the production period to provide proof of sale on any commodity covered by APP.

Producers who received a 2013 APP advance from the CCGA are eligible for the Stay and are encouraged to contact the CCGA for more details.

Quick facts

Last year’s Western Canadian crop, at 76 million tonnes, was 50 per cent higher than average. This volume put significant pressure on Western Canada’s grain handling and transportation system. The APP is a financial loan guarantee program that provides producers easier access to credit through cash advances. Under the APP, producers can receive cash advances of up to $400,000 on the value of their agricultural product, of which the first $100,000 in each crop year is interest free. The deadline to repay the 2013 APP advances is September 30, 2014. The CCGA administers advances for a number of crops including barley, beans, buckwheat, canaryseed, canola, chickpeas, durum, Ethiopian mustard (carinata), fababean, flax, hemp seed, lentils, mustard, oats, peas, rye, soybean, timothy hay (for export), millet, triticale, wheat, and winter wheat.


“Our Government has taken immediate, concrete action to get grain moving faster and to improve the performance of the entire rail supply chain in order to help farmers get their crops to market. This extra time will give producers a bit of breathing room to sell their 2013 crop and meet their financial obligations.”

– Agriculture Minister Gerry Ritz

“The APP is an extremely valuable program for farmers, helping them to market their crops more effectively. However, the shipping challenges that many farmers are facing right now make it almost impossible to meet the impending repayment deadline of September 30th. This six-month extension will be extremely helpful in alleviating the financial strain that many farmers across the West are facing today.”

– Brett Halstead, President of the Canadian Canola Growers Association and farmer from Nokomis, Saskatchewan

Additional links

Advance Payments Program

Harper Government Welcomes Passage of Rail Logistics Legislation

Fair Rail for Grain Farmers Act

Canadian Canola Growers Association (en anglais seulement)


Jeff English

Director of Communications

Office of the Honourable Gerry Ritz


Media Relations

Agriculture and Agri-Food Canada

Ottawa, Ontario



Follow us on Twitter: @AAFC_Canada

[…] » State needs Payday Loan

Be happy; don’t worry

It’s a good thing that the leges didn’t pass the legislation to tighten the restrictions on Payday Loans during the 2014 Regular Session. It appears the state will need one.

Thanks to the leges ignoring the problem (Kicked can down road.) during the session, according to State Treasury John Kennedy, the current fiscal year that ends at Midnight on Monday is short by $134 Million to fully fund the budget. ( Story here.)

Bobby Jindal’s Liar-in-Chief, Kristy Nichols a.k.a. Commish of Administration says not to worry. Even though the fiscal year ends Monday, she won’t close the books until August 15. That’s plenty of time for the imaginary money to materialize.

Of course, if the Tooth Fairy doesn’t bring the money before August 15, Nichols can just delay closing the books further or borrow money from the fiscal year that begins on Tuesday. Ceveat: Don’t try this with paying your taxes due the state of Louisiana; you’ll probably be committing a felony.

There is still a chance that the state can take out a Payday Loan to fully fund the current year budget until the treasury is flush again. That’s what such loans are for, aren’t they?


“King of Subversive Bloggers” – James Gill


High-class pawn for Mayfair's elite

NBSP has experienced a boom in recent years as a result of the increasingly stringent lending rules at the UK’s high street banks. Increased automation and the death of the personal bank manager has left many wealthy people waiting weeks to have loans signed off, and they are flocking to Sonnenthal in droves. “We are the new fringe bankers,” he claims.

“They walk in and five minutes later, they’ve got the cash. If they borrow £10,000, it might cost them £500 in interest but we don’t add book charges or fees. Some banks charge more than we do for their loans.”

From its single West End outlet, NBSP has issued £50m worth of loans in the 15 years since inception with just four full-time staff. Its largest loan to date is £3m for a rare blue diamond. Many of Sonnenthal’s customers are collectors, art dealers or aristocrats, and a few celebrities have passed through the doors, but Sonnenthal refuses to name names. “Some competitors show pictures of items they’ve sold and it turns my stomach. That gives the industry a bad name.”

He will only talk about pawned goods in the vaguest terms: “We’ve had an old collection of Oscar Wildes,” he says, “One guy was a Titanic fanatic and had lots of telegrams from the ship.” But from James Bond film props to Napoleon Bonaparte’s personal effects, no valuable item, no matter how unusual, is turned away. “That’s the beauty of being independent,” he says. “We can consider all kinds of items.”

Valuing these weird and wonderful assets has never been easier thanks to the Internet, but selling them can be a challenge, claims Sonnenthal. “The market can be volatile. If you hold an item for seven or eight months, the value can change massively. If we’re lucky, we make just a few months’ interest.”

Around 20pc of clients fail to reclaim their assets and NBSP works with auction houses Bonhams, Christie’s and Sotheby’s to sell unwanted items. The economic climate over the past few years can’t have made this process easy. “People aren’t buying diamonds and watches as they used to,” says Sonnenthal. “And because of all the competition in the market, we’re having to lend more than we used to in order to compete. Clients might phone six different pawnbrokers to compare prices. But we won’t give out loans that people can’t pay back because we don’t want to end up with the asset, and turn away 10pc of deals.”

Competition is very heavy in this space, especially after the arrival of Borro, which grew 100pc last year, lending more than £25m in 12 months. “Lots of people have copied our business model,” says Sonnenthal. “There’s a lot of dirty fighting. But you have to stay hungry and keep competing.”

Although NBSP’s “cash for gold” rivals profited during the recession from the boom in gold prices and demand, Sonnenthal’s firm suffered. “We had a very dark moment when the economy crashed and we couldn’t sell the goods we had,” he says. “We’d overlent on some of the stuff and couldn’t make it back. It’s hard having your money tied up for seven months at a time.”

The backlash against other short-term lenders – mainly payday loans companies – has also resulted in more arduous regulation. “They were charging too much interest and now we’ve all had a kick,” says Sonnenthal. “The legislation is tighter on everything.”

But his elite pawnbroker is now having the last laugh. Its loan book is bursting once again, and the drop in gold prices has sent some rival players to the wall. In March, Albemarle & Bond and Herbert Brown, the UK’s second largest pawnbrokers, went into administration after expanding rapidly during the recession. “I thank God that I stuck to my guns and avoided gold,” says Sonnenthal. “We stuck to the high end which has turned out to be a real sweet spot. Just think of us as the Coutts of pawnbroking.”


Missouri lawmakers pass changes to payday loans –

JEFFERSON CITY, Mo. — Missouri lawmakers have given final approval to legislation that would eliminate renewals on payday loans and lower the interest lenders can charge.

The Senate voted to send the bill to Gov. Jay Nixon Thursday with a 26-4 vote. The House passed the same measure earlier this week.

Current law allows payday loans to be renewed up to six times and permits lenders to charge fees and interest up to 75 percent of the original loan amount. The legislation abolishes the renewals and reduces the cap on interest to 35 percent. Borrowers could also enroll in an extended payment plan without being charged additional fees on interest.

In Missouri, these small, unsecured loans can be up to $500 and last from 14 to 31 days.


Sham Payday Loan "Reform" Passes Committee | Progress Missouri

Submitted by Sarah on Wed, 04/02/2014 – 01:53

This morning the Missouri House Financial Institutions Committee passed the sham payday loan “reform” bill. Ten Republicans and five Democrats voted in favor of the latest iteration of Sen. Mike Cunningham’s SB 694:

Rep. Tony Dugger, R-Hartville Rep. Wanda Brown, R-Lincoln Rep. Sandy Crawford, R-Lebanon Rep. Kevin Engler, R-Farmington Rep. Keith English, D-Florissant Rep. Paul Fitzwater, R-Potosi Rep. Paul Hinson, R-St. Clair Rep. Shelley Keeney, R-Marble Hill Rep. Andrew Koenig, R-Manchester Rep. John Mayfield, D-Independence Rep. Mary Nichols, D-Maryland Heights Rep. Noel Shull, R-Kansas City Rep. Clem Smith, D-Velda Village Hills Rep. Jay Swearingen, D-North Kansas City Rep. Paul Wieland, R-Imperial

Missouri has some of the loosest payday lending laws in the nation. Reform is desperately needed, but this bill isn’t it. Governor Jay Nixon and newspapers across the state, including the St. Joseph News-Press, the Kansas City Star, the Springfield News-Leader and the St. Louis Post-Dispatch have all denounced the bill as a sham. The average interest rate on a Missouri payday loan is an astronomical 455%. The industry thrives on repeat customers who are forced to take out subsequent loans to repay the interest and fees on their first loan. SB 694 does nothing to help consumers stuck in a cycle of debt. The “restrictions” imposed by this legislation sound tough but are easily side-stepped by predatory lenders, which is exactly why their lobbyists support it.

The bill was amended this morning to “restrict” interest rates to a mere 912% – still far above the average of 455%. Allowing predatory lenders to charge Missouri consumers outrageous 900% interest rates is not reform. Under this version, a consumer who borrows $350 will owe interest amounting to $122.50 in just two weeks. Consumer advocates have long pushed to cap these loans at 36% annual interest, just like we do for members of our military.

SB 694 is masquerading as reform of Missouri’s out-of-control payday lending industry. 912% interest rates are not reform.

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Payday Loan Bill Moves to Senate – Center for Responsible Lending

A Louisiana Senate committee has dramatically altered Senate Bill 84, a proposal by Sen. Ben Nevers (D-Bogalusa) to make payday loans more affordable and limit the amount of interest that can be charged on an annual basis. Instead of a rate cap, however, the measure now contains a prohibition against consumers taking out more than 10 payday loans in a year. The legislative panel also added language that allows for a database to better track how much consumers borrow.

Nevers agreed to the changes and promised to work on the bill before it reaches the Senate floor. The legislation advanced without objection, though neither supporters nor opponents appeared pleased with the changes. Dianne Hanley, a leader for grass-roots organization Together Louisiana, says her group will focus on House Bill 239, which includes a 36 percent APR limit.

Legislation to change the way payday loan businesses operate is stirring up controversy in Louisiana. Critics say the loans are too expensive, which makes them predatory and traps consumers into taking out new loans to pay off previous ones. AARP, Together Louisiana, and other organizations support the 36 percent interest cap. The Senate committee reported examples of the APR reaching 200 percent to even 477 percent. Nevers said tens of thousands of people are struggling with payday loans.


New payday lending bill moving in AL legislature | Times Free Press


Associated Press

MONTGOMERY, Ala. — After years of killing bills to tighten regulations on payday loans, the legislature may agree to set up a database to make sure people don’t take out more than $500 in loans at one time.

The House Financial Services Committee voted unanimously today to approve a bill that would set up the statewide database of payday loans in the Alabama Banking Department. Businesses would have to enter information in the database each time they got ready to issue a loan. If someone already had $500 in loans, the business could not issue one exceeding that.

The bill’s sponsor, Democratic Rep. Patricia Todd of Birmingham, said Alabama has had a $500 limit, but there was no way to enforce it without a central database. She said people would go to multiple lenders and take out more than $500 in loans, trapping them in a cycle of high-interest debt.

“This will at least keep people from having multiple $500 loans,” she said.

Todd’s bill now goes to the House. She said she is optimistic about its chances because she worked out a compromise with the industry and had bipartisan support in developing the compromise.

Payday loans are short-term loans, usually for 14 to 30 days with annual interest rates that can hit 456 percent. Payday lenders say they serve a market that banks don’t want to serve, and the costs are cheaper than bouncing a check.

Todd and others have tried for several years to pass bills lowering the interest rates with no success. The bill she introduced at the start of the legislative session stalled in the Financial Services Committee, where six of the nine members had received campaign contributions from the industry or an associated political action committee. The amount ranged from $1,000 to $3,900.

Once Todd dropped the interest rate cap and focused on the database, her bill breezed through Wednesday with bipartisan support.

Gov. Robert Bentley’s Banking Department tried to use its regulatory authority to set up a database last year. The industry sued and got the database put on hold pending a trial in June. Todd’s bill would negate the lawsuit and get a database operating by early 2015.

Herb Winches, lobbyist for the 13 Check Depot stores in the Birmingham area, said the family-owned business wants to make sure small lenders have the same access as big lenders. If that is done, he said Check Depot is fine with the legislation.

“It’s going to become law, so you don’t have any choice,” he said.

Anna Pritchett, advocacy director for AARP Alabama, said the bill doesn’t do as much as the organization for older citizens wanted, but “any forward motion is good.”

Todd said she would like to give the database two years to work and then come back with additional regulatory legislation.

Todd’s bill does not affect title loans on vehicles.


Payday Loans With Four-Digit Interest Get Thumbs-Up From Some …

Image payday-loans-sky-high-interest.jpg

Payday loans function as the last resort for Americans in tough economic times to get a quick infusion of needed cash for overdue bills, sudden medical expenses — or even to buy a gift for a loved one on a birthday or anniversary. But payday loans, from lenders who generally operate out of no-frills storefronts in lower-income and poor neighborhoods, can create more far worse problems than they solve with massive interest rates that would make even the big credit card companies ashamed.

That is why payday loan companies are often referred to as “predatory lenders.” They prey on the desperation of hard-working people who still can’t make ends meet thanks to poor wages from low-paying jobs.

Now lawmakers in two states want to give predatory lenders even more liberty to charge debilitating interest rates to borrowers who often are out of options simply to keep the lights on.

Over the next decade, experts project that one of every four Americans will be stuck in a low-wage job, the kind that though it requires full-time hours, pays an hourly rate at or below the federal poverty level.

That’s where payday loans come in — taking advantage of people who need cash fast and have no other legal way to get it. Each year, about 12 million people take out payday loans according to one recent study.

A different study looked at why individuals take out payday loans. The number one reason, at 69 percent, was simply to pay regular bills. After that, in a distant second place with 16 percent, were people who take out payday loans to cover unexpected emergencies. Paying for special occasions was third, with only eight percent resorting to payday loans to pay for gifts, vacations, and so on.

In other words, seven out of 10 payday loan borrowers, or about 8.4 million Americans, resort to payday loans simply to make ends meet. And each one of those Americans will pay the payday loan company $520 in interest and other fees for every $375 he or she borrows — an effective interest rate of 1,387 percent.

While paying that much interest can be crippling for families with no other options than to take out payday loans, lawmakers in at least two states are pushing to allow those interest rates to soar even higher.

In Pennsylvania, which is one of 15 states that currently ban payday loan companies by capping interest rates at 24 percent, Republican legislators Chris Ross and Pat Browne have introduced a bill to lift that cap.

In Missouri, rates are now capped at 75 percent of the total loan — an effective annual interest rate of 1,950 percent for a two-week loan. Republican State Senator Mike Cunningham has introduced a bill to lift that limit — in a state where 2.34 million payday loans were issued in 2012.

On the other hand, in Alabama, several pieces of legislation from both Republicans an Democrats aim to place caps on payday loan interest rates at rates ranging from 30 percent to 36 percent annually.

But the lenders complain now that if rates are capped, they won’t make enough money.

“It would be virtually impossible for us to operate a storefront at that rate,” Buck Wilson, of Modern Financial Services — a group that represents the interest of payday loan companies in Alabama — said, warning that desperate borrowers would then be sent into the hands of illegal loan sharks, who are the main competition in the payday loans industry.

[Images: Shaun Wilkinson / Shutterstock and taberandrew via photopin cc]


The best way to Make an application for Pay Day Loans with Poor …

The easiest method to instantly get the money you’ll need would be to be eligible for a a pay day loan online. Most trustworthy loan companies offer flexible relation to payment minimizing rates of interest. Furthermore pay day loan companies don’t execute credit inspections and don’t require documents fax needed.

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Another crucial problem associated with pay day loans on the internet is coping with the entire process of application. Because the condition rules vary and also the profiles of potential debtors will also be different, there can’t be a distinctive pay day loan provider perfectly appropriate for everyone. You will find times when some clients could get attractive rates and versatile loans while some are continually declined. Some debtors get instant approval with no documents while some are requested to fax their pay stubs to ensure the use status, as needed through the legislation of countless states. For this reason the very best factor to do would be to qualify to three or 5 loan companies after which pick the loan most appropriate for the situation. Doing it on the internet is among the benefits of taking pay day loans.

Ought to be fact nearly all online lending companies make use of the method known as Money Overnight, and that means you can get the cash around the following working day so long as you submit the application before 4 p.m. Normally the loan money are moved through direct deposit in to the client’s banking account.