High-Cost Lenders Scheme with Banks to Evade Consumer Protections

High-Cost Lenders Scheme with Banks to Evade Consumer Protections

A few high-cost lenders are evading state consumer protections through rent-a-bank schemes. Through these sham arrangements, these companies are exploding right through the interest rate limits that most states have put in place for good reason, to protect people from high-cost debt traps that drain them of their hard-earned income. In the following states, payday lenders are using banks, which aren’t generally subject to state interest rate caps, to make usurious loans that exceed the state’s rate cap. The banks engaging in these schemes are abusing their charters and enabling predatory loans...
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Payday and Other Small Dollar Loans

In Mississippi, this quick way out of a financial hole often leads to bankruptcy

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KEVIN G. HALL AND PAUL HAMPTON | Sun Herald
“Not only has the legislature not done anything to reduce the harm, it has taken affirmative steps to expand the harm,” said Diane Standaert, executive vice president and director of state policy for the Raleigh, N.C.-based advocacy group Center for Responsible Lending. Consumer advocates in Mississippi agree. “I’ve heard it said that any business is a good business in Mississippi, even if it hurts its citizens,” said Charles Lee, consumer protection director for the Mississippi Center for Justice, adding this lending targets the “least capable of being able to defend themselves.”
Payday and Other Small Dollar Loans

Payday and Car Title Lenders Drain Nearly $8 Billion in Fees Every Year

Payday and Car Title Lenders Drain Nearly $8 Billion in Fees Every Year

Payday and car-title loans typically carry annual percentage rates (APR) of at least 300%. These high-cost loans are marketed as quick solutions to a financial emergency. Research demonstrates, however, that they frequently lead to debt that is nearly impossible to escape. In addition, these loans are related to a cascade of other financial consequences, such as increased overdraft fees, delinquency on other bills, involuntary loss of bank accounts, and even bankruptcy. For car-title loans, the end result is too often the repossession of the borrower’s car, a critical asset for many people...
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Payday and Other Small Dollar Loans

High-Cost Payday Lending Traps Mississippi Borrowers

High-Cost Payday Lending Traps Mississippi Borrowers

A CRL analysis finds that payday lenders charge up to 572 percent APR for two-week loans at over 900 payday lending outlets in Mississippi. The typical borrower in that state pays an estimated $691 fees for a $350 payday loan repeatedly renewed, and still owes the principal. Overall, payday lending drains $270 million from Mississippi families every year. An exemption allowing payday lenders to charge many times the 36 percent APR cap in Mississippi expires in 2012, but the payday lending industry has always fought hard to protect their exempt status. We expect a tough fight during the 2011...
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