When you hear the words “Payday Loan” what comes to your mind?

1. Do you think of an industry out there taking advantage of consumers?
2. Or, do you think about an industry providing people with relief and peace of mind during this financial crisis?

Most people would say answer a.  But is that true or do we need to educate ourselves regarding this part of the financial industry?  Who are the people that need these payday loans and do they have other options?

According to www.census.gov the official poverty rate in 2010 was 15.1 percent, which was up from 14.3 percent in 2009.  In 2010, 46.2 million people were in poverty, which was up from 43.6 million in 2009.

Those are staggering numbers.  People are having a hard time making ends meet. From 2009 to 2010 an additional 2.6 million people were at poverty level.  Where did they come from?  Middle Class families?  Low Income families?   Who is out there helping them get back on their feet?  The banks?  With the foreclosures on homes, the increased account fees, overdraft fees and high credit guidelines… what do you think?

What sort of monthly expenses do all of us face? Rent/Mortgage, utility bills, insurance, car payment, food allowance just to name a few.  If you are running out of money at the end of the month what would you sacrifice?  Your electric bill?  Your rent?  Your car loan?  Or just overdraft your bank account?  All of those choices involve late fees or overdraft fees and may incur being harassed by credit agencies or having your electricity turned off, being kicked out of your home or having your vehicle repossessed.  None of those sound like viable solutions to me.

According to www.wikipedia.org the definition for a payday loan is “a small, short-term loan that is intended to cover a borrower’s expenses until his or her next payday.”   That is truly what a payday loan is there for.  Many times you will hear payday opponents talk about high interest fees, but when you research these fees in comparison to bank charges and late fees of missing necessary payments and/or possible repossessions/foreclosures/losing electricity, going hungry etc. – which sounds better to you?

So before we judge the financial institutions giving payday loans or the people receiving such loans – let’s make sure that we look at the situation from all angles, and form an educated decision.

I’m not much of a frequent air traveler however, when I do travel – I don’t want to spend an extra $240 for bag fees on a roundtrip ticket.  Let me put it this way, I booked a ticket with a reputable, “I hope we won’t crash” airline to fly from Phoenix to Fort Lauderdale 3 months ago.   I’ll tell you, I walked up to the counter to check in with my fiancé, handed out tickets to ticket agent, she started typing away and processing our tickets.  We’re so excited to get on the plane and jet to paradise (no, not Fort Lauderdale… The Bahamas) to check out our where we’re getting married in February and meet out wedding planner and all the fun stuff that comes along with that.

Back to the counter, the agent asked “will you be checking any bags today?”  Yes, we have 4 bags…  She then got a huge smile on her face, rubbed hands together and said,  “How would you like to pay for your bag fees, credit card or…?  (I swear she stared drooling out of the side of her mouth like she just got back from the dentist getting a cavity filled)  I cut her off and said, “what bag fees”?  Sir, to check your bags on this flight its $120, how would you like to pay for that?

I had a heart attack fell on the floor, starting convulsing… After I recovered from said heart attack, I calmed myself down, talked it out with my fiancé a bit, sucked it up and put the $120 on my credit card.

Now, we’re on the plane, I’ve started drinking already, granted it was only 10AM, but I needed something to help with the pain..

Our trip was great, had a fabulous time on the beach, relaxing for 6 days, enjoying the sunshine and each others company..

…Now the trip is over. Not yet ready to get back to reality, but will be nice to be home however.

We’re all set, packed up, called a cab to get us from the hotel..  Got to the airport, walked up to the ticket counter gave the very nice lady our tickets, she asked us, “Will you be checking any bags with us today?”  Yes, we will be checking 4 bags today.

The next words out of her mouth were the most unexpected words I would hear,  “That will be $120 or your bag fees, how would you like to pay for those today?”

Holy $*@#$% I feel another heart attack coming on…  I said to the lady behind the counter, I already paid for those in Phoenix. No Sir, I’m sorry, you only paid your bag fees for one way.  WHAT!!!!!  Are you kidding me??  I have to pay another $120 for bag fees??

Yes, that’s correct sir, how would you like to pay for that today?

At this point, I’m so frustrated I stared laughing in fear that I was going to do something stupid at the airport and end up in jail.

I gave her my credit card, ONCE AGAIN!!!  She ran the card and said, “thank you sir, I hope you have a wonderful flight”.  YEAH, WHATEVER LADY!!!

So after all of this, we were sitting on the plane, I said to my fiancé you know what, “we just paid $900 for roundtrip tickets that should have only cost us $650.

Again, I started drinking again, to ease the pain…

I have two words for every airline out there that charges bag fees… CON ARTIST!!

You may have to take out a PayDay Loan to pay your bag fees….

If you have a choice in choosing an airline that flies to your destination, I would recommend Southwest Airlines for your travels…

I hope you enjoyed this story. I still haven’t recovered from this completely. If anyone has recommendations on how to get through this, feel free to respond.

Safe travels everyone…

It seems that a lot of people in the state of Washington are concerned over the internet lending industry, but my worries are that they are not doing enough research before applying for an online payday loan. Just as in Washington,there are businesses all around the internet that are not legitimate. It is the job of consumers to educate yourself if you are providing your personal information to a website. There are numerous legitimate websites out there (including Leadpile’s) that allow a consumer to securely request a payday loan. If you are a consumer and needing that extra short term cash, do your homework on the website you are filling out your information and make sure you are completing an online form that is secure. If there are issues in WA, there are potentially issues all over the US, but a lot of this lies with the consumers and knowing what you are doing. Knowledge is power for consumers!

Sounds like there might be some talk in Mississippi to potentially try and make some changes to the payday loan process. As we all know these short term loans are a necessity for many individuals, however some states are trying to incorporate stricter laws for the lenders. This is what appears to be trying to happen in MS. The proposed amendment would allow all consumers at least 28 days to pay on loans of $201 to $500. On loans of $200 or less, the $21.95 fee would be reduced to $20, and consumers would have up to 21 days to pay. The positive thing that this particular house banking committee chairman said was they are trying to help the consumers, but not get to a point where they are trying to put a legitimate business out of business (the lender). This seems to be something that more states should focus on. How can we continue to make sure the consumers are protected, but also allow them to get these short term loans…. and not put the lenders out of business. We all know consumers need these loans and some never expect they will be one that is in dire need of a short term payday loan, but for those situations where needed these loans must remain available to consumers. In order for loans to remain available to the consumers, we must also protect the lenders that are extending these loans. Stay tuned to see what happens with this MS amendment.

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It seems that Montana might be the next state that could be incorporating payday loan interest rate caps. Myloansconsolidated.com is reporting that there is some new news out there regarding Montana, and a potential vote on a payday loan law that could be passed. If the law passes it would put a cap of 36% interest rate on payday loan and cash advances.
States jumping in and trying to regulate these short term loans is something that is not anything new, however what state will be affected next is what we are all watching. We work a lot with the payday loan leads and want to make sure we are knowledgeable of any new payday loan news going on. We will all wait and see if Montana implements this new law. Stay tuned.

The number of underbanked consumers having little to no ability to obtain credit or utilize the services of a conventional bank is currently 60 million and growing. Companies have been emerging to help these consumers, with the newest of which being ZestCash. Douglas Merrill, the former Google CIO and VP of engineering launched the new ZestCash product hoping to serve and attract the underbanked and aim to legitimize the payday loan industry.

The traditional payday loan is between $100 – $1,500 and paid back on the consumers next two pay dates, offering at times an extension for an added fee. ZestCash differs from these loans by allowing the loan amount and length to be chosen by the consumer. The consumer is shown the amount of the loan chosen broken down by weekly payments (which are auto debited from the customers bank account) prior to the loan being given.

Currently, ZestCash has a $500 borrowing limit operating online without any brick and mortar locations.

PDLindustry.com blog is reporting some new Wisconsin lending laws will be taking effect in January. These changes could affect those payday loan lenders that we are working with online, but also affect those lenders that are running the brick and mortar stores.

Some of the new changes in Wisconsin will be:

* There will no longer be title loans available
* Payday loans will have no interest rate cap
* 90 day minimum term
* The maximum principal and interest is $1,500
* There will be a state database in place
* Customer files will be maintained for 3 years
* There will be no late fees
* There will be no no wage garnishment or criminal prosecution on debtors

It seems all we ever read about is the “negative” about the payday loan industry, however there seems to be some positive momentum happening for payday lenders. Are people finally seeing that there is a need to help those consumers that are paycheck to paycheck? Americanbanker.com is reporting some positive news for the overly criticized payday loan industry.
Are lenders closing up store fronts to help cut costs, and therefore going to be utilizing the internet more to generate their business? For some, the answer it yes. Future growth for many payday lenders is probably going to be in the alternative products that many are getting into to help diversify their portfolio. Launching new products such as pre paid credit cards and bill pay services are some of the products that payday lenders are either getting into, or have already tapped into. This is great news for the longevity of the payday lenders. So what are these payday lenders going to be doing in the states where the payday loans are banned? Getting into ownership of pawn shops appears to be the direction many lenders are going in states such as WA and AZ. Lots of positive things happening, and we are anxious to see how Leadpile will be apart of the future success of the lenders.

In NY there seems to be some interest with potentially passing a law that would allow check cashing stores to lend money. The bill, they would call the “Short-Term Financial Services Loan Act”, would potentially allow registered check-cashing stores to make loans between $300 and $2,000 for 90 to 180 days. The loans could not be more than 25 percent of a borrower’s gross monthly income; installment repayments must be 10 percent or less. This could certainly benefit those frequenting the check-cashing stores that are paycheck to paycheck. New Yorkers are in need of this sort of short term loan because there are about 825,000 un-banked adults in New York City, according to the Department of Consumer Affairs, and this is something I am sure is similar in some of our nation’s largest cities. Advocates of this new pending law are wanting it to be known that this is NOT a payday loan, but it is in fact a loan with a repayment schedule that has installment payments within two days of a borrower’s payday.
No matter what it would be “called” it seems that there could be some additional resources for New Yorkers that are paycheck to paycheck. If a law like this is passed in NY, then will other states follow? We shall see… Stay tuned!

Times must be tough if one of the world’s largest retailers is planning on offering small business loans. MSNBC is reporting that Wal-Mart is teaming up with a lender to offer small business loans to some of our nation’s businesses. So, is the motive behind something like this to promote businesses to spend money at their stores? If that is in fact the case, is that really a bad idea?
The retail giant is reporting that in a recent survey, they conducted with their business clients, a large percentage of them were rejected for business loans. Therefore, in a effort to capitalize on these “unhelped” businesses, Wal-Mart teamed up with Superior Financial Group to offer these businesses a small business loan.
Good idea or not? If our “traditional” banks are not lending to consumers and businesses, is it really a conflict of interest to have a retail giant want to jump in and help? There seems to be no strings attached for these businesses and being required to only shop at Wal-Mart stores, however they are offering a discount on the Sam’s Club membership. Sounds like a good idea to me……

It looks like the payday “police” have hit Colorado. There is a proposed payday loan bill that would put an interest rate cap on payday loans. The reasoning behind this bill is that some Coloradans believe, “that excess interest rates can lead Colorado families into a debt trap of repeat borrowing”. There are three separate proposed bills. One would put the rate cap at 18%, another at 28% and another proposed bill putting the rate cap at 36%. The unfortunate thing about these sorts of bill is that the potential rate caps would hurt the payday lenders and potentially not allow them to stay in business. This would then hurt consumers who are looking for a much needed payday loan. We will all be watching the outcome of these proposed bills.