I admit to some pre-existing suspicion of the "payday loan" industry, but I am alarmed at the statement attributed to unnamed officials of Advance American in the Daily News-Record story ("Payday Loans Unfairly Judged," Dec. 11).
True, in Virginia, lenders can charge $15 for every $100 they lend. Calculated as an annual rate, the interest comes to 391 percent, according to industry officials.
However, it is only possible to accrue that high an interest rate if borrowers take out 26 such loans in one year, Advance American officials say.
To, the contrary, any victim who borrowed $100 from Advance America and paid $15 interest for 14 days, will have accrued and paid "that high an interest rate" (391 percent) whether he takes out no more, or 25 more, such loans for the year. Of course, your losses will be even higher in dollar amounts if you borrow more, or borrow more frequently.
According to the Virginia State Corporation Commission - Bureau of Financial Institutions' 2006 Annual Report, the annual percentage rates charged by licensed payday lenders in Virginia ranged up to 782 percent for each of the years 2003-2006, with the average annual percentage rate charged on payday loans ranging from 373 to 386 percent for those years.
The report includes the information that the average number of loans per borrower per year at these payday lenders was increasing for each of those years.
We can let our elected representatives know how we feel about the laws that permit such outrageous interest rates.
source:http://www.dailynews-record.com/opinion_details.php?LID=5738
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