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July 12th, 2010, 09:38 PM #1Payday Loan Promoters - Be Prepared
With the announcement today of sufficient bipartisan Senate support for passage later this week of the Wall Street Reform Bill (already passed by the House), this will mean for the first time federal regulation of Payday lenders.
A few states have passed payday regulations and the result has generally been many payday lenders no longer doing business in those states. Most recently this has been the result in Arizona, which now limits payday loans from exceeding 36% interest rates.
The effect of the new laws on payday lenders is unknown, but the likely effect will be to drastically reduce the number of lenders, and the fees that remaining lenders are able to charge. This will undoubtedly result in a lowering of commissions paid to payday affiliates.
Those of you in this niche may want to consider contingency plans before the ax falls.
July 12th, 2010, 10:30 PM #2
I've got a friend who owns a local payday loan store. Not sure what kind of interest he charges but he says if the feds step in to regulate it, he's just going to close up shop. He's past retirement age and already has a military retirement so he doesn't need the money. His 3 employees are the ones that are going to suffer.
I imagine the same thing will be happening around the country. The larger ones that have affiliate programs will probably be slashing what they are willing to pay, if they keep the program at all.:rankn-scp John - This is our chosen profession. This is our way. This is what we do.
July 12th, 2010, 11:02 PM #3
in Colorado, one of the few places in the country that collects actual data from the industry, payday ... loans had an average APR of 485.26%."The state no longer allows payday lenders to set interest rates as high as 460 percent annually. A 10-year-old law expired this month that allowed them to charge more than 36 percent, the cap imposed on other lenders, such as banks."
July 12th, 2010, 11:22 PM #4
Those percentages are pretty meaningless unless you look at examples with typical amounts of money involved and loan lengths.
For instance, if you borrow $1000 for a week, here is the interest paid for various rates:
There's no way that a Payday Loan company can stay in business making one week $1000 loans for less than $7 in interest.
I really hate to see companies preying on those who aren't very good at math, but you can only do so much to protect people from themselves.
It's not something I would ever promote.
July 12th, 2010, 11:50 PM #5
Statutes pertaining to lending are almost universally despicable.
In California, Usury laws prohibit any loans for consumer purposes to include an interest rate that exceeds 10%. BUT exceptions to that include home loans and home improvement loans, and entities that are specifically exempted from such restrictions include banks, credit unions, finance companies, and pawn brokers - every business in the business of lending money!
To me, major banks that charge up to 36% interest on credit card balances are as bad, if not worse, than payday lenders. Average working people that have lost their job, have a serious illness, or some other similar hardship, and run up a $10,000+ cc balance and have been late a couple of times and thus have had their interest rate bumped up to the top rate, can likely never pay it off.
July 13th, 2010, 02:11 PM #6
As for payday loans and affiliate marketing, it's hard to trust that industry. CJ has owed me a payment for 5 or 6 years for a payday program. They "can't collect" they say, so can't pay me. Some years back though, I found the same company running several other active CJ programs under different names. I reported it, but shock of shocks, I'll still never get paid.Eathan Mertz
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