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University of Wisconsin–Madison
Poverty-related issues in the news, from the Institute for Research on Poverty

Tag: Payday lending

Predatory Lending

Payday loans’ potentially predatory replacement, By Gillian B. White, August 12, 2016, The Atlantic: “Dangerous, high-cost lending isn’t going away anytime soon.  While some have heralded the Consumer Financial Protection Bureau’s long-awaited payday-lending regulations as significant progress toward the end of predatory lending practices, other, similar products have, as predicted, started to take their place…”

Payday Lending

Payday loans’ debt spiral to be curtailed, By Stacy Cowley, June 2, 2016, New York Times: “The payday loan industry, which is vilified for charging exorbitant interest rates on short-term loans that many Americans depend on, could soon be gutted by a set of rules that federal regulators plan to unveil on Thursday. People who borrow money against their paychecks are generally supposed to pay it back within two weeks, with substantial fees piled on: A customer who borrows $500 would typically owe around $575, at an annual percentage rate of 391 percent. But most borrowers routinely roll the loan over into a new one, becoming less likely to ever emerge from the debt…”

Payday Lending

  • 1,000% loans? Millions of borrowers face crushing costs, By Alain Sherter April 25, 2016, CBS News: “Last Christmas Eve, Virginia resident Patricia Mitchell borrowed $800 to help get through the holidays. Within three months, she owed her lender, Allied Cash Advance, $1,800. On the other side of the country, Marvin Ginn, executive director of Native Community Finance, a small lender in Laguna, New Mexico, reports that some customers come to him seeking help refinancing loans from nearby payday lenders that carry annual percentage rates of more than 1,000 percent…”
  • Payday lending: Will anything better replace it?, By Bethany McLean, May 2016, The Atlantic: “Fringe financial services is the label sometimes applied to payday lending and its close cousins, like installment lending and auto-title lending—services that provide quick cash to credit-strapped borrowers. It’s a euphemism, sure, but one that seems to aptly convey the dubiousness of the activity and the location of the customer outside the mainstream of American life.  And yet the fringe has gotten awfully large…”