The Center for Responsible Lending, hereafter referred to as IWAC (Idiots Without A Clue,) has said they do not support a ban on rollovers for payday loans. They claim that banning rollovers does nothing to prevent the “predatory” practices of payday lenders.
IWAC uses the following example to illustrate. With rollovers, someone can borrow $300 for two weeks for a $45 charge. If they cannot pay the loan back at the end of the two weeks, they can simply pay the $45 charge to extend the loan an extra two weeks to give them time to pay it back. They still owe $345 at the end of those two weeks.
On the flip side, if rollovers are banned, a borrower can borrow $300 for two weeks at a $45 charge. At the end of the two weeks, they pay back the $345 and get another two week loan of $300 for a $45 charge. Yes, I am being dead serious, this is exactly what they said, try not to laugh.
Leslie Parrish,the Senior “Researcher” at IWAC,said “”When rollovers are banned, the industry simply replaces them with back-to-back loan flips that continue to ensnare people in long-term debt carrying an annual percentage rate of 400 percent.”
Long term debt? Did IWAC not just say that at the end of the two weeks, the loan and fee was paid back in full? Is two weeks long term to these morons? They say this because borrowers are not allowed to get a second loan until the first loan is paid back.
This means precisely the opposite of what IWAC is claiming. It means that without rollovers, borrowers cannot get caught into any kind of long-term debt, because they cannot infinitely extend the loan. This serious lack of logic from a supposed researcher is astounding!
Even more astounding, the public is gobbling this up! How can people side with those who are ignorant of the facts, who present them falsely, and who haven’t got a clue what they are talking about?
What IWAC is really saying is this: we can’t stop at banning rollovers, we have to ban payday loans outright. Anything short of a 36% APR cap is a failure to them. These people are complete and total nut jobs.
And if the day comes that payday loans are banned, and IWAC has a party to pat themselves on the back, I for one will be laughing. I will laugh at them when unemployment has a spike as the thousands upon thousands of payday lending employees are suddenly out of work.
I will laugh when people in need of short-term credit now have nowhere to go except a bank, who will turn them down if they don’t have superior credit scores. I will laugh when overdraft fees, finance charges and other bank fees make payday loan fees look like pocket change. Oh wait, they already do…
And after I’m done laughing, I will die out of udder shock that a confused public took financial advice from actually believed an organization that was founded by two of the top 25 culprits of our world’s financial collapse. Payday loans are great products and not in any need of restrictions and regulations.
