Posted on: 01st Jan, 2010 02:31 pm
A new law is in effect in the state of Kentucky concerning Payday loans, those nasty little things we continue to read about here.
Effective today, 1/1/10 (wow - did that without erring), new limits affect the payday business in KY. Borrowers will be limited to two loans totaling no more than $500 at any one time.
What happens currently in terms of maximum dollars (of course there is no maximum elsewhere) is unknown.
According to a spokesperson for the National Conference of State Legislatures, Kentucky "seems to be leading the way" in creating legislation that will limit what payday loan companies can do.
This is good news for consumers - in Kentucky only at the moment - but we hope it's a harbinger for what may take place across the country.
But wait...here's breaking news....as i wander about the internet, i have just come across the following:
the state of Washington also has a new payday loan law in effect as of today. its new law limits the size of a payday loan to 30 percent of a person's monthly income, or $700, whichever is less.
also, people would be unable to obtain multiple loans from different lenders. the maximum number of loans a person can take out in a 12 month period is 8 (isn't that plenty anyway?), and it also establishes a database that will be used to track the number of loans consumers have taken out.
i think this is great news for a far too little cared-for segment of our national population.
i have no affiliation whatsoever with usfastcash or any other payday lender. everything that i have posted on this website concerning payday loans is my personal opinion based on observations i've made along with my experiences in the banking and lending fields.
Effective today, 1/1/10 (wow - did that without erring), new limits affect the payday business in KY. Borrowers will be limited to two loans totaling no more than $500 at any one time.
What happens currently in terms of maximum dollars (of course there is no maximum elsewhere) is unknown.
According to a spokesperson for the National Conference of State Legislatures, Kentucky "seems to be leading the way" in creating legislation that will limit what payday loan companies can do.
This is good news for consumers - in Kentucky only at the moment - but we hope it's a harbinger for what may take place across the country.
But wait...here's breaking news....as i wander about the internet, i have just come across the following:
the state of Washington also has a new payday loan law in effect as of today. its new law limits the size of a payday loan to 30 percent of a person's monthly income, or $700, whichever is less.
also, people would be unable to obtain multiple loans from different lenders. the maximum number of loans a person can take out in a 12 month period is 8 (isn't that plenty anyway?), and it also establishes a database that will be used to track the number of loans consumers have taken out.
i think this is great news for a far too little cared-for segment of our national population.
i have no affiliation whatsoever with usfastcash or any other payday lender. everything that i have posted on this website concerning payday loans is my personal opinion based on observations i've made along with my experiences in the banking and lending fields.
Hi George!
It's really good to know that states like Kentucky and Washington have come up with such laws regarding the payday loan companies. I hope that similar laws will be enacted in other states thereby helping the borrowers to not to fall into further debt trap.
Sussane
It's really good to know that states like Kentucky and Washington have come up with such laws regarding the payday loan companies. I hope that similar laws will be enacted in other states thereby helping the borrowers to not to fall into further debt trap.
Sussane
Hi George,
Such a move on the part of the Govt. to curb the menace of the payday loan companies is definitely welcome. It's good to know that there will now be a limit to the maximum number of payday loans a person can have at a time in Kentucky. This will no doubt save a large number of people from getting into the trap laid by the payday companies. However, I also do feel that enacting new laws is not enough to stop people from getting into the traps. People should be made aware of the negative effects of taking too many payday loans at the same time.
Such a move on the part of the Govt. to curb the menace of the payday loan companies is definitely welcome. It's good to know that there will now be a limit to the maximum number of payday loans a person can have at a time in Kentucky. This will no doubt save a large number of people from getting into the trap laid by the payday companies. However, I also do feel that enacting new laws is not enough to stop people from getting into the traps. People should be made aware of the negative effects of taking too many payday loans at the same time.
However, I also do feel that enacting new laws is not enough to stop people from getting into the traps. People should be made aware of the negative effects of taking too many payday loans at the same time.
man, you said a mouthful! but even more so, people need to be aware of the negative effect of taking any payday loan.
man, you said a mouthful! but even more so, people need to be aware of the negative effect of taking any payday loan.
Congress' proposed legislation that will regulate banks and protect consumers from some of the shadier financial practices is also causing payday lenders to ramp up their lobbying.
More than half of the nation's payday lenders are represented by The Community Financial Services Association, which has increased its lobbying efforts by about 75% compared to 2008. Payday lenders are afraid of having to comply with this new legislation.
So far, the House of Representatives has passed a version of the bill that would make these lenders subject to the proposed Consumer Financial Protection Agency; but the Senate's version of that bill contains far fewer protections for consumers (just what these lenders want).
The feeling of the lobbyists is that the nature of their business (essentially small loans) ought to exempt them from the regulations needed to care for the banks and mortgage companies that contributed to our economic stress.
But of course, payday lenders charge interest rates that are anathema to the borrowing public. Only 15 states (and Washington, DC) impose rate caps on these loans. All of the other states allow give these lenders the freedom to charge interest at any rate whatsoever. And, of course, we all know how heinous their collections activity is, if only because we've been reading these things on our forums for oh-so-long.
Various states have taken action to try to force the payday loan industry to be more reasonable in the interest rates they charge. The state of Arizona appears to be on its way to eliminating them, as an exemption that allowed these lenders to exceed 36% (they go upwards of 400%!) is about to expire on June 30.
Naturally, the payday lenders in Arizona are most upset about consumers who are "looking for a dog to kick," and are striving to continue the exemption in pepetuity.
More than half of the nation's payday lenders are represented by The Community Financial Services Association, which has increased its lobbying efforts by about 75% compared to 2008. Payday lenders are afraid of having to comply with this new legislation.
So far, the House of Representatives has passed a version of the bill that would make these lenders subject to the proposed Consumer Financial Protection Agency; but the Senate's version of that bill contains far fewer protections for consumers (just what these lenders want).
The feeling of the lobbyists is that the nature of their business (essentially small loans) ought to exempt them from the regulations needed to care for the banks and mortgage companies that contributed to our economic stress.
But of course, payday lenders charge interest rates that are anathema to the borrowing public. Only 15 states (and Washington, DC) impose rate caps on these loans. All of the other states allow give these lenders the freedom to charge interest at any rate whatsoever. And, of course, we all know how heinous their collections activity is, if only because we've been reading these things on our forums for oh-so-long.
Various states have taken action to try to force the payday loan industry to be more reasonable in the interest rates they charge. The state of Arizona appears to be on its way to eliminating them, as an exemption that allowed these lenders to exceed 36% (they go upwards of 400%!) is about to expire on June 30.
Naturally, the payday lenders in Arizona are most upset about consumers who are "looking for a dog to kick," and are striving to continue the exemption in pepetuity.
while I kind of support the idea of limiting payday loans, as they tend to cause a lot more trouble than they solve, part of my flinches at legislation like this being passed.
anything that legislates to restrict your personal financial choices rubs me the wrong way and smacks og " the Gov knows best". while it may be true in some cases, carte blache legisalting to remove discretion from everyone seems like using a sledgehammer to crack a walnut.
At the end of the day it's a persons choice whether or not to use a payday loan company, noone is holding a gun to their head. I'd personally rather not see the state decide on how much discretion I can have over my own finances.
anything that legislates to restrict your personal financial choices rubs me the wrong way and smacks og " the Gov knows best". while it may be true in some cases, carte blache legisalting to remove discretion from everyone seems like using a sledgehammer to crack a walnut.
At the end of the day it's a persons choice whether or not to use a payday loan company, noone is holding a gun to their head. I'd personally rather not see the state decide on how much discretion I can have over my own finances.
I understand your overall point, rise, but disagree respectfully. These loans are targeted to a portion of our community that is, generally, financially illiterate. These are people in desperate situations, and (at least based on what we've read on MortgageFit) the companies offering these payday loans are not forthcoming about disclosures as they ought to be.
To legislate a cap on interest rates is, in my book, perfectly acceptable. There are usury laws throughout the country that prohibit interest rates from escalating beyond a particular level. In several cases, however, payday loans have no restrictions. It's like paying vigorish in the neighborhood. One of the states has a cap of 60% annual percentage rate. That's atrocious to say the least.
Because these are unregulated, non-oversight loans, the collections practices are heinous, the methods by which their customers are to reach them are apparently grossly inefficient (as seen on these forums), and the list goes on and on. I can't provide my own personal reasoning because I've been blessed all these years with the ability to obtain loans from reputable lenders who charge market rates. And, fortunately for all of us in Connecticut, these loans are not allowed, by law.
To legislate a cap on interest rates is, in my book, perfectly acceptable. There are usury laws throughout the country that prohibit interest rates from escalating beyond a particular level. In several cases, however, payday loans have no restrictions. It's like paying vigorish in the neighborhood. One of the states has a cap of 60% annual percentage rate. That's atrocious to say the least.
Because these are unregulated, non-oversight loans, the collections practices are heinous, the methods by which their customers are to reach them are apparently grossly inefficient (as seen on these forums), and the list goes on and on. I can't provide my own personal reasoning because I've been blessed all these years with the ability to obtain loans from reputable lenders who charge market rates. And, fortunately for all of us in Connecticut, these loans are not allowed, by law.