According to Kevin Borland of the Kentucky chapter of the Community Financial Services Association of The United States, the truth that pay day loans will live on in the state after House Bill 182 failed to install a 36 percent APR cap is an affirmation of customer freedom of choice. He writes in a Lexington Herald-Leader op-ed that this battle for freedom of choice sits at the heart of almost all arguments for the short term installment loans industry. Resource for this article – Right for consumers to choose preserved in Kentucky by MoneyBlogNewz.
House Bill 182 stopped for a while
A 13-10 vote was used to defeat Kentucky House Bill 182. Still, the bill will likely be introduced in 2012 by opponents of payday cash advances. Such stubbornness illustrates how much Kentucky activists misunderstand pay day loans, writes Borland. Personal loan companies aren’t allowed to charge interest in the state law. In Kentucky, the product is categorized as a single-payment, fee-based product.
Borland suggests that the opposition’s use of Annual Percentage Rate as a yardstick is “an attempt to trick legislators and the public” into thinking that short term installment loan pricing is exorbitant. Depending on the lender, it is just a 15 to 25 percent fee in a flat fee of $15 to $25 on every $100 loaned.
CLOUT’s opinion
House Bill 182 was supported by the AARP, the Citizens of Louisville Organized and united Together (CLOUT) and the Kentucky Coalition for Responsible Lending (KCRL). The quick installment loan market has banks and credit unions in them, funded by CLOUT and KCRL that compete. CLOUT and KCRL can be attacking payday lenders like this while the competition hands over money. It is great for competition in the free market without this additional bit of bribery though. Borland states that there should be some kind of disclaimer about the involvement.
The payday loan company has AARP as a competitor directly. Chase Financial is used as a credit card. These allow AARP members to obtain money advances, which Borland claims bears a high rate of interest.
Best choice by consumer
Every situation is different for every customer. Still, payday advance are sometimes the best choice. Borland believes that CLOUT, KCRL and AARP would do better to discover alternatives if they think short term loans are harmful. The belief that those organizations do not do so may suggest that the attacks are all bark and no bite.
Information from
CLOUT Funding
cloutky.org/page3/page3.html
KCRL Coalition
kyresponsiblelending.wordpress.com/coalition-membership/
Lexington Herald-Leader
kentucky.com/2011/04/11/1704022/consumers-won-with-defeat-of-payday.html
The CFSA encourages responsible lending and borrowing
youtu.be/OZQr_nh7GZA
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