Report shows predatory payday lending on the decline in Washington

[eridani]

http://washingtonpolicywatch.org/2012/10/17/report-shows-predatory-payday-lending-on-the-decline-in-washington/

In addition to reducing the number of loans made, the 2009 reform also guaranteed further protections for borrowers. One example is in changes to payment plans. Before the law went into effect, consumers could only enter a payment plan with a lender after four successive loans with the same company.

However, after the law went into effect on January 1st, 2010, borrowers had the right to a payment plan whenever they chose, and could not be charged a fee. Reforming payment plans allowed borrowers to pay back loans with greater ease, and made it easier for high-frequency borrowers to avoid “churning” – taking out additional high-interest loans to pay off others.

The overall decrease in predatory lending is a major victory for consumers. According to a 2012 Pew report on payday lending, 12 million Americans use these loans annually, and on average a borrower will take out eight $375 loans per year, spending $520 on interest payments. The report also notes that the average borrower is in payday loan debt for five months per year. By bringing consumer-focused standards to the payday loan industry, Washington legislators won a victory for consumers and common sense.

[Upton]

1. Unfortunately..

the net effect of this legislation has been a reduction in the number of payday lending stores. In some areas they've been eliminated entirely. This particularly hurts low income individuals who have nowhere else to go...

[eridani]

2. But credit unions are reaching out to the unbanked

And the payday lenders who play square are still there.