A press release from a coalition of groups who launched a ballot initiative campaign to cap interest rates on so-called “payday loans”–a finance product aimed at struggling consumers that frequently traps borrowers in a cycle of unaffordable debt at interest rates that would blow creditworthy consumers away:
A coalition of community, faith, and advocacy organizations have come together to stop predatory payday loans in 2018. They are working to qualify an initiative for the November ballot that would cap payday lending interest rates. Payday lenders are currently exempted from the state usury cap, allowing them to charge over 200% for short-term loans of up to $500.
Payday lenders strip $50 million per year in interest and fees from financially-strapped Coloradans. The average loan lasts 97 days, and some customers take these loans one after another, spending more than half the year in high-cost debt. The average loan of $392 costs customers an average $119 in interest and fees to borrow money for 97 days. With a default rate of 23 percent — almost 1 in 4 loans — many customers face insufficient funds and overdraft fees, collection efforts, and even bankruptcy for a loan that was supposed to help them through a shortfall.
There was a legislative attempt at reforming this industry a few years ago that made a few changes beneficial to borrowers, most importantly changing the terms of payday loans from a two-week full repayment to a six-month plan. Despite this change, consumers continue to be subject to finance terms from payday lenders that result in a loan product of dubious net value just to bridge the gap to the next pre-spent paycheck. Initiative 126 would cap the allowable interest on payday loans at 36%, which most people would still consider to be awfully damn high.
Back when payday lending reform was a major issue in the Colorado legislature leading up to the passage of the 2010 reform legislation, longtime readers will recall this this blog was hit by a large volume of spam posts linking to various payday lending outfits. We were never quite sure if there was a connection between the legislative effort in Colorado to rein in payday loans and the mass spamming of our blog, but we resolved in the wake of that episode to enthusiastically support all efforts to regulate these loan sharks into an ethical business model. Or failing that, put them out of their predatory business entirely.
And please, spare us the disingenuous pleas of mercy for the minimum-wage employees of payday lending shops. There are better jobs waiting for all of them in today’s fully-employed economy. The damage done by predatory lending eclipses any value of those low-wage jobs.
Colorado will be just fine without loans that hurt people more than they help them.
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A good article on the subject here.
In an effort to protect borrowers, ballot initiative to cap “payday loans” clears legal hurdle
As a past user of these loans, I can tell you that the industry fights back by trying to get prospective lendees to sign "protest forms" against the initiatives. These little forms are on the counter, prominently displayed next to the cashier windows.
"I'll spend my money my way! Stay out of my business! There won't be any payday loans if this initiative goes through…" (my paraphrases on this literature)
I'm guessing Jovan Melton drives around from storefront to storefront gathering all the forms up since the legislature's not in session.
I will vote against it.
I am against any bills/initiatives with hard-coded numbers.
Bills like budgets?
Voters don't vote on budgets. Our reps do.
speed limits
usery limits (I know, I know)
age limits
gasoline taxes
the Inidana bill to define pi
I could go on – but your objection is noted – but stoopid
Motor fuel taxes make my point.
The Social Security FRA could have been indexed to longevity.
The minimum wage could/should have been indexed to CPI.
At least, I am not a moran as you are.
pi is pi
db, you would want payday interest loans indexed to something – what?
madco's writing poetry, maybe a modified haiku.
You are out -crypting each other here. I have no idea what either of you just wrote. Translation, please? in prose?
That's often the case for Madco, mj. Often I don't have the foggiest ide a of what he is trying to say.
Is that intentional on the part of MADCO? I thought it was just sloppy typing.
Oh, stop. I was merely noting that davebarnes and madco seemed to be trying to outdo each other in the short, choppy haiku-like epigrams filled with hidden meaning department.
I could decipher what davebarnes was getting at, but it took some effort. I think madco is advocating for clear cut limits and numbers, while daveb is advocating for flexible "indexes" in legislation.
I still don't know what db would index payday loan interest rates to – as it is an industry with so many out of control variables – high-poverty working poor clientele, low wage employees, high profit corporations, politicians on the take.
Any one of those could serve as an "index", but I personally think that madco has the better point that simplicity, hard and fast numbers probably make for better law. Or more passable and understandable law. Term limits and speed limits, indeed.
For db's "every new law with funding must be indexed" plan, there would have to be massive consumer education as to what indexing is. Legal / economics math is not something that is taught much in high school. Our school has a mandatory consumer financial education class, but it isn’t a CDE requirement.
That's not a one-off post by Madco. He is often incoherent.
Haiku?
More likely amaretto.
Speaking of haiku, when do we get a "Trump stinks"sonnet or haiku?
Wafting on the air
A foul stench of rotten meat
Trump tweets the nation.
Fine job. I was toying with sponsoring a Trumpku dairy. I once did a column of Lammku, haiku about Dick Lamm, including
Lamm as president.
Does that make Kevorkian
Surgeon general?
-0-
Trump is president.
The dreams of Lincoln now lie
Dead at his feet.
-0-
Trump hates Canada.
The North Country fair is refuge
For our lost, best hopes.
-0-
Trump grabs at pussy
And claims to cherish women.
What a foul, foul lie.
-0-
A teacher still fights
On Colorado's vast plain
For truth, not Trump.
'Tis a pity we don't have a program for consumers similar to the one available for small business. Colorado Microloans Program
If it's at all possible, join a credit union. I belong to White Crown and can borrow up to $5,000 at 12 percent with a mouse click.