Birmingham's payday lending moratorium set for vote, public hearing
BIRMINGHAM, Alabama -- The future growth of payday loan, title pawn and check-cashing businesses in Birmingham will be decided Tuesday when the Birmingham City Council votes on a proposed year-long moratorium.
The ordinance proposed by Councilwoman Lashunda Scales would ban any new title loan or payday loan businesses from opening for one year or until the city's comprehensive plan is complete.
Representatives of the payday lending industry say the proposed restrictions are unneeded.
But Scales, who is chairwoman of the council's Economic Development Committee, said Birmingham has been inundated with the businesses. "The law department has come up with an ordinance that will protect the citizens of Birmingham," she said of the proposal, which has been revised since she first presented it two months ago. "With the law department's official input, it answers all of the questions that council members had."
The businesses' negative impact is twofold, Scales said.
She said businesses offering short-term loans have high interest rates that keep financially strained customers trapped in a cycle of making interest-only payments.
Secondly, she said, the presence of too many of these businesses repel other commercial development.
"Our citizens deserve first-class businesses at an affordable price," she said. "However, if you have a string of these kind of predatory lending agencies in those same communities, then the likelihood of those (other) businesses locating in that area is nonexistent."
Scales said she has been contacted by representatives of AARP who support her ordinance.
"We're talking about senior citizens and the working poor," she said. "This is to be a voice for those who don't have a voice."
Industry response
However, industry officials said their industry provides a necessary service and is unfairly characterized.
"A moratorium on state-regulated storefronts is going to push consumers in need of short-term loans to unregulated Internet options with steeper fees," said Charles Hunter, spokesman for Borrow Smart Alabama, the industry's trade group. "This moratorium may be well-intentioned, but it is an unnecessary piece of legislation that will have unintended negative consequences including reduced city revenue and empty storefronts.
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"To the extent that banks get away with this scot-free has become a lobbying point" for payday lending shops, she said. "It helps undermine state efforts to police and curb the high-cost, small-dollar loan market."
The ordinance proposed by Councilwoman Lashunda Scales would ban any new title loan or payday loan businesses from opening for one year or until the city's comprehensive plan is complete. Representatives of the payday lending industry say the proposed
"Look over there -- payday loans,'' says the spokeswoman for San Jose-based Opportunity Fund, a Bay Area-based microlending nonprofit that helps small businesses get off the ground or expand. "And there's a check-cashing place on the corner.
Payday loans sprang up in the UK when the credit crunch hit. An import from the US, they generally charge about £25 for every £100 borrowed with the money repaid within 28 days, ie on your next payday. However, charges can spiral if repayments aren't
When asked if payday lending leads to spiraling debt, Cesar Garcia, a 25-year-old water-district driver and satisfied customer, responded with uncommon common sense: "It all depends on how you manage your money." As for the $45 fee for a two-week loan,
Payday Loan Benefits
Right now the market place is massive for payday loans. While a lot of individuals are against utilizing payday loans–whether for their selves or for anybody–there are several other individuals who sing their praises. These folks are often the ones who have experienced the quick-resolve assist of a payday loan to see them by means of an unpredicted expense, and are recommending and endorsing their use.
And it really is no surprise–there are so numerous advantages to using payday loans, even even though some might be blindsided by the normal substantial expenses and interest rates. One of the largest rewards of making use of a payday loan is that you get cash when you require it. Payday loans are fast–the application procedure is quick and the cash deposited into your account is fast. Usually speaking, the method of applying for a payday financial loan normally requires about 15 to 30 minutes. In addition, by providing your checking account information, the financial loan amount usually gets immediately deposited into your financial institution account within the subsequent 24 several hours.
Yet another profit of utilizing payday loans is that the application method is very easy. You never have to go via a lengthy and challenging procedure in purchase to get accepted for a loan. If you can provide your name, tackle and other get in touch with info and show you have a task and a checking account, you might be essentially set.
Thirdly, no credit rating examine is needed for a payday mortgage–some thing that numerous shoppers discover attractive. Several individuals have bad or no credit rating for any range of motives, avoiding them from acquiring specific positive aspects or services, these kinds of as getting a higher credit rating control on their credit score card or even applying for a credit history card in the 1st area. Payday loans supply a problem-cost-free way of receiving that a lot-needed cash now with no credit history examine.
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