Nelson: Reform bill needs loan guidelines
Predatory lending is about as descriptive a term as one could apply to the practices pursued by payday loan and title loan outfits that take advantage of our society's lowest income citizens.
Continue reading the rest of "Nelson: Reform bill needs loan guidelines" by Athens Banner-Herald
Payday loans are short-term loans, given as an advance on a borrower's next paycheck, but the loans often come with high fees and extremely high interest rates that more often than not put the borrower in a cycle of debt.
These loan businesses drain the small yet life-sustaining income from the financially desperate among us. Additionally, the payday and title loan folks make it so easy to obtain money that the inexperienced and poor rush to them, especially in emergency situations where they have a big medical bill to pay or mortgage payment due. The companies then latch on to the debtors, requiring them to repay - which they often can never do - a sum exponentially greater than what they borrowed.
"A typical payday borrower pays $400 in interest alone on a $300 loan," Kathleen Day, spokeswoman for the nonprofit Center for Responsible Lending, said in an April 6 commentary on American Public Media's Marketplace program broadcast on local public radio station WUGA.
In Georgia, payday loans are illegal, and usury laws limit the interest rate amount a lender can charge. An unlicensed lender in the state cannot charge more than 8 percent interest on a loan of $3,000 or less, according to the Governor's Office of Consumer Affairs.
The GOCA site does, however, describe payday loans this way:
"(The payday loan company) does not perform a credit check, and you write them a post-dated check for the amount you want to borrow, plus a fee of $15 to $30 for every $100
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