Share on Google Plus Share on Twitter Share on Facebook Share on LinkedIn Share on PInterest Share on Fark! Share on Reddit Share on StumbleUpon Tell A Friend 1 (1 Shares)  
Printer Friendly Page Save As Favorite View Favorites View Stats   1 comment

OpEdNews Op Eds

Payday Loans - Modern Day Usury

By (about the author)     Permalink       (Page 1 of 4 pages)
Related Topic(s): ; ; ; , Add Tags Add to My Group(s)

View Ratings | Rate It

Become a Fan
  (191 fans)

Payday Loans: Modern Day Usury

by Stephen Lendman

Loan sharking writ large.

Payday loans let predatory lenders rip off unwary borrowers. They provide short-term unsecured quick cash. It comes at a high price. It matches the worst of loan shark practices.

The Center for Responsible Lending (CRL) calls itself a "non-partisan organization that works to protect homeownership and family wealth by fighting predatory lending practices."

It's "witnessed, studied, and fought against outrageous lending abuses." They "strip billions of dollars from (unwary) American families."

In July 2009, its report discussed predatory payday lending. It's titled " Phantom Demand : Short-term due date generates need for repeat payday loans, accounting for 76% of total volume."

In other words, debt entrapment assures repeat business. Borrowers need new loans to service old ones. They also need help to meet other obligations.

It's a scam. It extracts up to an 400% annual percentage rate (APR). It requires short-term balloon payments. They're do every two weeks. They extract 25 - 50% of borrower income. Doing so leaves them unable to handle daily obligations. 

It forces them into new loans. If not repaid, they're automatically rolled over. Added interest compounds. What a way to make money. It's sure fire profit-making. It works as planned.

In 2010, three million Americans got payday loans online. Doing so expands a lucrative profit source. By 2016, forecasts estimate 60% of payday borrowing this way. It's nearly double 2011's level.

Offshore sites operate. Doing so circumvents state regulations. Shell companies run them. Anything goes is policy. Consumer protections don't exist. Scams are easier than ever. Clever crooks find new ways to steal. It's easy when no one stops them.

New loans follow old ones. Many happen almost immediately. At times it's in a day or less. Doing so locks borrowers in debt. That's what lenders have in mind.

Borrowers "generally open new loans in rapid succession." Around 87% of new ones occur during the next pay period. Half come when borrowers are first able. They're after partially repaid old ones.

"Churning" guarantees big profits. Nearly 59 million loans exceed $20 billion. Loans to one-time borrowers account for 2% of volume.

Churned loans produce $4.5 billion in annual fees. Unwary borrowers don't know what they're getting themselves into. They enticed with first-time discounted or free terms. 

Next Page  1  |  2  |  3  |  4


I was born in 1934, am a retired, progressive small businessman concerned about all the major national and world issues, committed to speak out and write about them.

Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Add this Page to Fark! Submit to Reddit Submit to Stumble Upon

Go To Commenting
The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Writers Guidelines

Contact Author Contact Editor View Authors' Articles
Related Topic(s): ; ; ; , Add Tags

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

The McCain-Lieberman Police State Act

Daniel Estulin's "True Story of the Bilderberg Group" and What They May Be Planning Now

Continuity of Government: Coup d'Etat Authority in America

America Facing Depression and Bankruptcy

Lies, Damn Lies and the Murdoch Empire

Mandatory Swine Flu Vaccine Alert


The time limit for entering new comments on this article has expired.

This limit can be removed. Our paid membership program is designed to give you many benefits, such as removing this time limit. To learn more, please click here.

Comments: Expand   Shrink   Hide  
1 people are discussing this page, with 1 comments
To view all comments:
Expand Comments
(Or you can set your preferences to show all comments, always)

If payday loans are used as they are meant to be t... by Steve Manders on Tuesday, Mar 26, 2013 at 11:50:28 AM