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Letter: Payday Loans a 'Valued Credit Option'

An official from Advance America responds to a recent letter calling on the Rhode Island General Assembly to impose limits on the interest charged for so-called payday loans.

Dear Editor:

A recent letter to the editor (“Support Curbs on Payday Lending Interest Rates,” Mar. 23, 2012) presents a misguided argument for regulations that would do more harm to consumers than good.

When facing a financial shortfall, Rhode Islanders make borrowing decisions based on their personal and economic interests. For many, a payday advance, with its one-time fee of $10 per $100 borrowed, serves as an affordable tool for overcoming such challenges, especially when compared with more expensive options such as overdraft fees, unregulated Internet loans or missing a bill payment.

While any form of credit can be abused or misused, our experience shows that most customers use payday advances responsibly: Over 95 percent of Advance America customers repay their loans on time. We work with all customers to help them be successful borrowers, including those unable to repay by their due date, and offer an Extended Payment Plan at no additional charge.

Effectively eliminating this valued credit option with a 36-percent rate cap will not remove hardworking Rhode Islanders’ need for affordable, reliable and transparent short-term credit, and will only drive them to less-regulated, more expensive credit options. It is vital that the Rhode Island State Legislature preserve this valued credit option.

Sincerely,

Jamie Fulmer, Vice President-Public Affairs

Advance America

 

Past articles on this topic:

stephen v. martino April 04, 2012 at 05:01 PM
Mr. Fulmer: Your argument is both redundant and quite bogus. Your assumption that legislation would do more "harm than good" is wrong. Why? Well, as a former manager for Advance America I can tell you with certainty that the vast majority of your customers continue to turn-over their loans for years on end. This is how your company makes big money. Tell me, how is this helping Rhode Islanders? Ideally, your customers pay about $1200/year in pay day loan fees, and that doesn't include any other loans a customer may have. If 95% of your customers engage in this cyclical pattern, and believe me that figure is accurate, how is that a responsible use of this awful product? You target the poorest communitites across the country and "take advantage" of good human deceny, which is why pay day lending is so morally wrong. It takes one decent and honest person to continuously turn over a pay day loan for years, and that's what you folks prey upon. For that, your line of business is unconscionable. There are other financial alternatives offered, and I think it's time you folks realize that banks and overdrafts will no longer be your only competition. Also, the extended payment plan is openly restricted by company employees, and it's something employees are told NOT to "offer" to their customers. In theory it sounds nice, but unfortuanetly your company considers the EPP a risk factor. So Mr. Fulmer, why don't you stop spreading your industry rhetoric and just stick to the facts.

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