Payday loans industry

The industry of lenders who forgive “payday loans” is growing rapidly. These are high-interest loans to the monthly check from social security or social security office. “Get these people their money always, every 30 days, whether it rains or the sun shines”, William Harrod, a former manager of high-interest loan shops says in the Washington, DC.

Although the authorities may not transfer support or pension directly to lenders. Nevertheless, they have found a loophole, by working with banks that transfer money from their debtors to them. Then principal, interest, fees deducted, and the remaining amounts paid to the most elderly. As a result, loan sharks have, calculate the effective annual interest rates of 400 percent or more, almost unlimited control over the finances of their customers.

Critics argue that the customers of the recipients of public payments is not only reliable, but also very lucrative. For elderly or disabled people must usually live on low incomes and cannot repay loans quickly. “It is not so that they can easily work overtime,” said David Rothstein, an analyst of the Economic Research Initiative Policy Matters Ohio. – “These people are in a trap.” William Harrod was a manager of a branch of Check ‘n Go in a social housing estates for the aged and disability pensioners in Washington. He said his superiors had encouraged him to win the elderly as customers. That he did, as he had set for lunch on one of the benches and had come with the residents of the neighbourhood this week.

A few months ago, he chucked his job due to scruples. Harrod joined an initiative to combat payday loans. A representative for Check ‘n Go, an offshoot of the CNC Holdings in Ohio, the nation’s operates over 1,300 stores denies, however, that you broach targeted elderly. An example illustrates the vicious circle: Oliver Hummel from Billings, Montana suffers from schizophrenia. He receives a disability pension of $ 1,013 a month.

In 2007 and was his car repaired, and his 13 year old terrier earned him a big bill from the vet. Hummel took out a loan of $ 200. How many “payday borrowers,” he quickly realized that he could not pay back the loan. Therefore, he went to the next money providers. Within a short year, Hummel had eight loans from eight companies. The effective annual interest on loans is ranged from 180 to 406 percent.