'Pay Day Loans' Exacerbate Housing Crisis, page 2

Lets say you bounce a $5.00 check. You re-stock your account the next day, but not before the bank nails you with a $35 NSF fee.

So, you just borrowed $5.00, for 24 hours, at a fee of $35.00.

What's the APR on that? Try 255,500.00%

you can also add up all the fees and surcharges over and above 'interest' on your credit cards, recalculate the apr, and blow a payday loan out of the water. There's a reason "financial institutions" are exempt from the 45% APR cap. They wouldn't make any money if they weren't.

A man by the name of Martin Eakes, who runs a credit union in NC, successfully lobbied to have payday loans banned in the state of North Carolina. In '07 Eakes' credit union revenue went up by $70 million in NSF fees alone. Fees that would have been avoided had the consumers still had payday loans available.
Eakes attacks the Payday Loan industry as predatory lending. The same Eakes obtains free government grant money to loan to low income families in the form of mortgages at 13%... yes, 13%. The same Eakes has foreclosed on homes for past due amounts less than $100.

I would have thought that here of all places, people would look at payday lending with a little more of an open mind. The view from the top is always pretty, but some people simply don't have access to a hundred bucks. We read horrible stories in the media, and constantly see payday lenders labeled as "loan-sharks", or worse. I tell you what, go stand outside your local payday loan facility, and ask a payday borrower what they think of the industry. The story you get from the borrowers is one completely different than the story the media tells. Not to mention the outright lies the media spews regarding the fees and rates associated. Every state that allows payday loans, regulates them tightly. Any lender that charges more than 20 percent of the amount borrowed, is either an off-shore company, or an unlicensed lender operating outside the limits of the law.

Average payday loan amount is $225.00.
Average payday loan term is 14 days
Average payday loan fee is $40.50

If you get paid next friday, but they're going to turn your power off tomorrow, you've got no family or friends who can lend you the money, any one of you would gladly pay back $240 when you get paid, to borrow $200 today, keeping the lights on and your family warm. Not to mention, in many states, payday loan fees are earned on a per-diem basis, meaning you only pay for the days you actually have the loan. Take a 14 day loan out, but pay it back after seven days, you pay only half the fee.

You'd also be surprised at the actual borrowers themselves. The media would like to paint a picture of impoverished families being taken advantage of over and over, drawn into a cycle of never ending and ever increasing debt. They don't mention the doctors, lawyers and executives who make frequent use of payday loans. From a sample of over 70,000 payday loan borrowers, the average income was a tad over $64k a year! These are people who can't manage their money, it's not that they're broke. They simply spend it before they earn it. They borrow a few hundred when they need it, and pay it back when they're due.

The fact of the matter is, the demand for short term loans is not going to go away. Make payday loans illegal, people will turn to illegal payday lenders...All harsh legislation does, is move payday loans from a tightly regulated industry to the unregulated black market.