ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

A public comment period has begun and will continue through September 14th.

Our goal is to generate as many different comment letters from our member companies, including you, your employees, business associates, contacts and customers. 

We need to count on you to get involved to protect

Payday Loans Can Be A Lifeline For The Poor -- Meddling Bureaucrats Would Yank It Away

Despite Barack Obama's Hope and Change promises to fundamentally transform the U.S., there remain a great number of Americans who live paycheck to paycheck (when they have work at all). Occasionally, they find themselves in desperate need of short-term credit to avoid a financial disaster, but they don't have good credit.

One of their options is to get a short-term advance from a "payday lender." In the typical transaction, a storefront lending business provides a cash advance of a few hundred dollars to the borrower, who promises to repay within one or two weeks with a fee of 15 to 20 percent.

Suppose auto mechanic Joe Smith is short $100 of being able to pay for repairs to his refrigerator. He goes to a local payday lender and gets the $100. When he gets his next check in two weeks, he repays the loan plus $15. To Joe, that's much better than having the refrigerator break down, costing him a lot of wasted food.

Someone might point out to Joe that the annualized interest rate is usurious and claim that the lender is exploiting him. Joe would probably reply that he doesn't care because it's the best option he has. He might even tell the individual to go away and mind his own business.

Unfortunately, Washington, D.C. is full of bureaucrats who think that almost everything is their business, and won't go away because they have power. Read the entire article at FORBES

Check Into Cash Offers New Flex Loan in Tennessee

CLEVELAND, Tenn., July 13, 2016 /PRNewswire/ -- Check Into Cash has announced the launch of its newest financial product in Tennessee, the flex loan. Check Into Cash's flex loan is available at all Tennessee stores as an open line of credit, providing convenient access to a renewable source of funds.

"Check Into Cash is excited to add the flex loan to our wide range of products and services," said Check Into Cash President Steve Scoggins. "The flex loan gives our customers the flexibility to get the cash they need and control how fast they repay."

Qualifying customers in Tennessee can receive a flex loan up to $2,500 and borrow as much or as little cash as they need within their approved credit limit. Flex loan customers will receive a statement every payment period, and then choose whether to make the minimum payment or pay more of their balance off each period. There is no need to reapply once approved and, as long as a customer is in good standing, the open line of credit will be available as expenses arise.

"Our new flex loan adds to our list of services as a more versatile loan option," said Scoggins. "And as Your One Stop Money Shop, we still offer payday loans too, because we know true flexibility is the ability to choose."     Read the RELEASE

Commentary: A free society doesn't ban payday loans just because it disapproves of them

We must find a way of offering short-term credit to the poor that competes with the current providers.

As the Federal Reserve Bank of New York has taken the pains to point out, everyone hates payday loans except the 10 million people a year who take them out. It's no surprise, then, that the Consumer Financial Protection Bureau has taken up arms against the payday lending industry.

Banning things simply because we disapprove of other people's choices is not a mark of a free society. We might do so if we consider that people are being ripped off, and we might if we think the activity is harmful to those not making the actual choice themselves. Thus, laws banning pollution are fine, and laws restricting the capitalists' ability to gouge the worker are fine, too.

If we are to ban - or gut, given the Consumer Financial Protection Bureau's proposed rulemaking - payday loans, then we've got to work out which of those justifications meets this case. We have no evidence that people are being ripped off by what most assuredly look like eye-popping interest rates. Goodwill tried out some nonprofit experiments, working out of its own storefronts, too, and had to charge interest at 252 percent APR to make even a no-return system work. Similarly, the listed companies (that is, the ones we can see the accounts for) that indulge in this form of lending make no greater return on their capital than other companies in the consumer financial market.

We, therefore, have something that is expensive to produce but also desired by many. And our absence of excess profits tells us that loans of small amounts for short periods of time are simply something expensive to do. In this sense, such credit is like Aston Martin luxury vehicles. So they cost a lot. And? People want them, and they're expensive to provide. We might well think that someone's an idiot for purchasing one, but we don't actually go and ban it.

Read the story at PRESS HERALD

A proposed new rule from the Consumer Financial Protection Bureau may help protect people against predatory lenders, but could come at a cost for New Mexico credit unions and small banks.

The rule, announced in early June, would designate it an "abusive and unfair practice" for lenders to make short-term loans without determining that a consumer has the ability to repay it.

Lenders would be required to increase compliance checks and verifications on two types of loans. One is short-term loans that can include 14, 30, and 45-day terms with or without a vehicle title as collateral. The other includes longer-term loans where the annual interest rates exceed 36 percent, and there is a lien on a vehicle or some form of "leveraged payment mechanism."

Those types of mechanisms often include initiating automated transfers and withdrawals from a bank account, and paycheck deductions.

Paul Stull, CEO and president of the Credit Union Association of New Mexico, says that while there is good reason to curb predatory payday lending, casting an overly broad net that includes credit unions and small banks doesn't make sense.

"It's calling for doing more underwriting, complying with more regulations, increasing the number of forms, and increasing the number of compliance supervisory checks and double checks that go into this," said Stull.

Those checks could include things like requiring a lender to verify a person's net income, current debt obligations using credit reporting, housing costs, basic living expenses, and project someone's items for a period of time-based on the term of the loan.

Read the entire article at BIZ JOURNALS

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