Archive for April, 2010

Recent Updates On The CFPA Proceedings….

The news seems to be coming in almost non-stop today!

As most of you may (or may not) already know, Republicans and Democrats are currently negotiating on the proposed Consumer Financial Protection bill.  So far, things haven’t been going smoothly.

A recent post on Alabama Senator Richard Shelby’s Blog states:

I thank Leader McConnell and my Republican colleagues for providing an opportunity for my negotiations with Chairman Dodd to run their course.  I believe we owed the American people our best effort to make whatever changes we could to this incredibly complex piece of legislation because it will have wide ranging implications for our economy.  Chairman Dodd has assured me that he will address a number of concerns I have expressed with respect to ending bailouts.  We have been unable, however, to make any meaningful progress on other important components of the legislation.  It is now my belief that further negotiations will not produce additional results. “

It’s nice to see someone standing up for our rights, even if it’s a little more difficult.  Time and time again it appears as if Dodd is doing anything and everything to just rush this bill through as soon as possible.   Thankfully it hasn’t worked as of yet.   The latest developments show a vote of 56-42 with Democrats needing 60 to proceed.  Currently today’s vote was put on hold until tomorrow.   Let’s see what Senator Shelby has to say about the implications of this bill as it stands currently….

“This bill still contains a sprawling new consumer protection bureau that will find and force its way into facets of our economy that had nothing to do with the housing crisis.  This massive new bureaucracy would have unchecked authority to regulate whatever it wants, whenever it wants, however it wants.  I am aware of no other arm of the federal government this powerful, yet so unaccountable”

Couldn’t have said it better myself Senator!!  It really seems that Democrats have learned from the recent Health Care reform bill, to try and keep this debate OUT of the media.  Luckily we’re starting to see more public awareness and media coverage, as of recently.  But unfortunately it may be too late, for the bill may proceed as early as tomorrow if Democrats can gather enough votes.  Let’s hope that more senator’s stay true to protecting American’s from too powerful of a financial protection bill, which arguably may harm our economy more than it will help.  After all, there is no reason to respond to our current economic crisis by punishing and policing those financial institutions who literally had NOTHING to do with it!






What “Defines” A Payday Loan?

Most of us have heard the term “Payday Loan” before, and many of us already have at least a vague idea of what it means.  But unless you work in the industry, or have already taken out a Payday Loan before, you may be a little unclear on the actual details of what defines a loan as a “Payday” loan.  Let’s take a look….

Probably the most important point that defines a loan as a “Payday” loan would be that…. “A Payday loan is a short term loan, usually 1 month or less, which is set to be paid back in full on the customer’s next payday”.   Sounds simple enough, but let’s break that down a little further and tackle some possible FAQ’s.

“A Payday loan is a short term loan”

Q: Does that mean a “Payday” loan can ONLY be a short-term loan?  Can’t you set up a longer loan that pays off on the customer’s payday, and still consider that a “Payday” loan?

A: No.  “Payday Loan” is a term reserved only for short-term loans.  I do not believe there to be an “official” definition limiting Payday Loans to “x” number of days, but they are generally one month or (most commonly) less.

“which is set to be paid back in full on the customer’s next payday”

Q: So the loan MUST be paid back on the customer’s next payday to be considered a “Payday” loan?

A: No it is not a requirement to be considered a “Payday” loan.  Sometimes another date will be chosen as the due date for a “Payday” loan.  It’s just that the majority of Payday Loans will be paid back on the customer’s next payday.  The main reason being, that the lender wants to set a date on or near a payday to increase the chances that the borrower will have the funds to pay the loan back.  Also, it is in the borrower’s best interest to pay the loan back as soon as possible, so their next payday is usually a popular choice for the agreed upon re-payment date.    You could also use the term(s) “Cash Advance” loan, or “Payday Advance” loan for these loans.

Hopefully this explains some of the general requirements for a loan to be defined as a “Payday” loan.  As always, feel free to let us know if you have any questions as well!