Payday loan
A minority of mainstream banks offer advances for customers whose paychecks or other funds are deposited electronically into their accounts. The terms are similar to those of a payday loan; a customer receives a predetermined cash credit available for immediate withdrawal. The amount is deducted, along with a fee, usually about 10 percent of the amount borrowed, when the next direct deposit is posted to the customer's account. After the programs attracted regulatory attention[28][29], Wells Fargo called its fee "voluntary" and offered to waive it for any reason. It later scaled back the program in several states.
Income tax refund anticipation loans are not technically payday loans (because they are repayable upon receipt of the borrower's income tax refund, not at his next payday), but they have similar credit and cost characteristics. A car title loan is secured by the borrower's car, but are available only to borrowers who hold clear title (i.e., no other loans) to a vehicle. The maximum amount of the loan is some fraction of the resale value of the car. These loans may be available on slightly better terms than an unsecured payday loan, since they are less risky to the lender. If the borrower defaults, then the lender can attempt to recover costs by repossessing and reselling the car.
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See also
- Interest
- Usury
- Pawnbroker
- Title loan
- Loan sharking
- Predatory lending
- Americans for Fairness in Lending
- Community Financial Services Association of America
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References
- ^ a b c CNN Money. A low, low interest rate of 396 percent
- ^ The John Warner National Defense Authorization Act - Talent Amendment
- ^ USA Today: Law caps interest on 'payday advances' to service members
- ^ Duprey, Rich. Legislative Foes Shackle Payday Loans. Motley Fool. Retrieved on 2007-10-14. “The payday loan industry remains under assault at both the federal and state level.”
- ^ "Financial Quicksand: Payday lending sinks borrowers in debt with $4.2 billion in predatory fees every year", Center for Responsible Lending
- ^ the Consumer Federation of America: Consumers Warned of Online Payday Loan Sites
- ^ Kilroy v. A OK Payday Loans Inc., 2006 BCSC 1213 (2006).
- ^ Kilroy v. A OK Payday Loans Inc., 2007 BCCA 231 (2007).
- ^ a b Atlanta Journal-Constitution: Payday lenders hope to return in Georgia, 3/18/07
- ^ Text of Marquette Nat. Bank v. First of Omaha Corp. decision from Findlaw
- ^ FDIC's Revised Examination Guidance on Payday Lending
- ^ Forbes.com: NM Governor Signs Payday Lenders Bill
- ^ a b Jarrett, Jillian S.. "Payday Lending Rules Tightened", The Washington Post, 2007-12-13. Retrieved on 2008-01-20.
- ^ Stewart, Nikita. "Bill to Cap Payday Loan Interest Rates Passes", The Washington Post, 2007-09-19. Retrieved on 2008-01-20.
- ^ Payday loans: Worrying trend?. Moneybox. BBC (2003-09-13).
- ^ Our Charges. Payday UK. Retrieved on 2008-06-10.
- ^ The Consumer Credit (Advertisements) Regulations 2004. Office of Public Sector Information, UK. Retrieved on 2008-06-10.
- ^ Ibid, secton 8.
- ^ UK Parliament Early Day Motion 1280
- ^ "Facebook users warned about ads", BBC News, 2008-05-12. Retrieved on 2008-06-10.
- ^ Credit Action Campaigns on Facebook Debt Ads
- ^ Fast Cash Loans Charged by State Regulator
- ^ U.S. House of Representatives Committee on Financial Services Democratic Office
- ^ "Defining and Detecting Predatory Lending", Federal Reserve Bank of New York Staff Reports, Number 273, January 2007
- ^ The Toledo Blade: Local payday lenders cash in on rising short-term needs
- ^ Times Dispatch: Other Options Exist
- ^ "Breaking the cycle of payday loan 'trap'", USA Today, September 19, 2006
- ^ "New FDIC guidelines allow payday lenders to ignore state laws"
- ^ "Wells Fargo puts hold on direct deposit advance", bizjournal.com, June 2, 1997
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Articles
- Jennifer Brown, "Payday-loan legislation faces a fight", Denver Post, February 19, 2008
- "Payday lenders: Beating back rate caps in Richmond", January 31, 2008
- Brennan Clarke, "Loan rangers", BCBusiness, January 1, 2008
- "Payday lenders craft user protections", USAToday, February 22, 2007
- "This Opinion Brought To You By..." Criticism of Tom Lehman's article on Payday Lending and Public Policy, Business Week, January 30, 2006
- "America's growing fringe economy: Financial services for the poor and credit-challenged are big business", Dollars & Sense magazine, November/December 2006
- "How the other half banks: The depressing, amazing 'payday loan' business", Slate.com, May 10, 2004
- In debt we trust Documentary about banking practices, including payday loans
- Barry Yeoman, "Sudden Debt", AARP magazine
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Government resources
- FDIC Guidelines on Payday Lending
- "The Cost of Payday Loans", the Financial Consumer Agency of Canada
- Supreme Court of the United States. Marquette National Bank of Minneapolis v. First of Omaha Service Corp. et al., 439 U.S. 299 (1978), Findlaw.com
- North Carolina Department of Justice (2006). Payday lending on the way out in NC (PDF). Retrieved on 2006-03-22.
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Industry reports
- "Predatory lending and the military: The law and geography of "payday" loans in military towns", March 2005
- "Defining and Detecting Payday Lending", Federal Reserve Bank of New York
- "Payday Lending: Do Outrageous Prices Necessarily Mean Outrageous Profits?", Fordham Journal of Corporate & Financial Law
- "Payday Lending and Public Policy: What Elected Officials Should Know", Tom Lehman, Ph.D., associate professor of economics at Indiana Wesleyan University
- Veritec Solutions white paper, August 2007
- "Payday lending companies fill consumer demand", Truman State University
- "Payday Lenders: Heroes or Villains?", Adair Morse
- "Payday Holiday: How Households Fare after Payday Credit Bans", Donald P. Morgan and Michael R. Strain
- "An Experimental Analysis of the Demand for Payday Loans", Bart J. Wilson, David W. Findlay, James W. Meehan Jr., Charissa P. Wellford, and Karl Schurter.
- "Payday lending: Serving the unbanked", Mises.org, February 10, 2004
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Organizations
- Community Financial Services Association of America, US payday loan industry trade organization
- Consumer's Union Fact Sheet, Consumer Union
- Payday loan site of the Consumer Federation of America, a consumer advocacy organization
- Virginians Against Payday Loans An alliance of businesses, consumer advocates, and faith-based groups
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