March 7, 2007 5:03 AM
Payday Loan Companies Change Practices (for the Good)
I'm a believer of free market. As long as the nature of payday loans are properly disclosed, and the industry stops misleading marketing, I don't see an issue with the high interest rates. We have to allow borrowers to make decisions based on free will.
From MSNBC/AP:
Under pressure from lawmakers and consumer groups, the payday lending industry on Wednesday announced changes to educate borrowers and help customers who have trouble making payments on short-term loans.
...
The biggest change would give customers more time to pay back a loan with no financial penalty. This "extended payment plan" would be available at least once a year and provide borrowers between two and four extra months to pay off loans.Other changes include a $10 million national ad campaign warning that payday loans are not a long-term financial solution and a ban on ads that promote payday advances for "frivolous purposes" like vacations.
Consumer watchdogs remained skeptical.
"This does not solve the problem of triple-digit interest rate payday lending that traps borrowers and leads to repeat borrowing," said Jean Ann Fox, consumer protection director for the Consumer Federation of America.
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