Payday loan industry fights back against critics
By Josh Bergeron
January 5, 2014
Selma Times Journal
With payday and title loan legislation scheduled to be introduced during the 2014 Alabama legislative session, some members of the industry are firing back at criticism.
It would be the second time in as many sessions that such legislation has been introduced. Last year, payday loan legislation passed in the Alabama House of Representatives, but stalled in the Senate.
Payday loan storefronts often charge 400-percent interest rates for 14-or 30-day loans. State Rep. Dario Melton (D-Selma) is a co-sponsor on one of two bills to lower interest rates on payday loans and said the rates are morally and ethically wrong.
“When [a] working mother comes to them for an advance to put food on the table for her children or when a single father needs his check a few days early to pay rent, it isn’t right that they will now be locked into a cycle of repaying debt on astronomically high interest rates,” Melton said. “This only requires more advances and creates a deeper, self-fulfilling cycle.”
On the other hand, industry representatives say the interest rates plastered on store walls are an unfair way to evaluate the loans because of their short-term nature.
“While it is easy to criticize our industry based on part of the facts, our customers understand the cost of our product,” Advance America Senior Vice President Jamie Fulmer said. “Most commonly the customer comes in one time and we never see them again. It’s not like they are trapped in some sort of cycle of debt.”
A better assessment of Advance America — a payday loan franchise with dozens of locations in Alabama — comes by evaluating extra fees based on the amount borrowed. Fulmer said Advance America charges customers $17.50 per $100 borrowed, with no extra fees added for late payments.
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