Year Morgan

Report Sheds Light On Controversial Financing Business

Politicians have been batting around the issue of payday lending. The number of pay day loans taken out within the last four years within the UK has increased by over 400 percent. Montana’s I-164 initiative seeks to limit payday lending, and Arizona’s “Operation Sunset” ended all payday lending within the state on June 30. Federally, S.3245, the Payday Lending Limitation Act of 2010, seeks to extend the Truth In Lending Act to cap all pay day loans at 36 percent interest.

The statistical foundation of payday cash advances

Consistently inaccurate or conflicting information makes comprehending the payday lending sector more difficult. A recent report by Personal Money Store shows that though there are many things about pay day loans that are simply not supported by research. For example, the average cash advance customer makes $ 47,260 per year and has been working for the same employer at least four years. According to an analysis by creditcards.com, only 20 percent of charge card customers actually understand their credit card agreements. In comparison, 95 percent of payday loan customers understand the charges they’re paying.

How payday lending works in the figures

Studies by groups ranging from the Federal Reserve of New York State to our company, Personal Money Store, found that 11 percent to 20 percent of applications in brick-and-mortar stores and up to 99 percent of online applications are rejected. Over 20 percent of short-term loans, even with these high standards, have to be entirely written off as a total loss. Most personal loan companies record 8 to 10 percent profit. In comparison, Goldman Sachs reported 27 percent profit.

Making the political debate more substantive

An informed discussion of the political issues around payday lending can be difficult to find. With pending legislation within the Senate, 15 states that ban payday lending altogether and several states considering limitations, accurate statistics are vital.

Carly Morgan and Jason Morgan kiss : Year 2010 March 18