Talk:Payday loan

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[edit] PLWatch

The guys that write the "Payday Loan Industry Watch" run several online payday loan stores - I submit that is an extremely biased link and suggest it be removed.

Bias is okay in an external reference site. Inaccuracy, however, is not. If you have a reliable source discrediting the website's claim to be written by "independent observers," that may be good cause for unlinking. Otherwise, the site looks fine to me. Matt Fitzpatrick 19:00, 24 August 2006 (UTC)
We do not run any online payday loan stores. (Or any payday loan store. Or any kind of store, in fact.) If you want to understand who we are and why we do what we do, please visit: Payday Loan Industry Watch's About Us Page. Will Stotler, PLIWatch Managing Editor 13:58, 13 September 2006 (UTC).
But it is commercial. Popups, only 3 reviews from a year ago, news from feeds, minimal copy and a "find a lender" directory with affiliate links. Flowanda 03:08, 10 May 2007 (UTC)
We don't have any popups. Our reviews *are* old but still valid. News isn't from feeds. Most of our "copy" is centered around content in our podcasts. But it's not minimal. We have significant amounts of original copy. We do have a Find a Lender section--but we don't push that item and it's a feature that's little used. We are not funded by the industry, special interest groups, or others. We're self-funded. Your criteria for PLIWatch's removal is unfair and has a personal bias against PLIWatch specifically. If you're pulling PLIWatch, you certainly should also remove the other links from the bottom of the article as well, starting with "In Debt We Trust" (clearly a commercial venture) and then maintaining your scope to pull the others. Pliwatch 15:41, 25 May 2007 (UTC)
Flowanda--Thank you kindly for putting the matter into an arbitration status for careful third-party review against Wiki guidelines. Pliwatch 01:28, 26 May 2007 (UTC)
I've reviewed the link for PLIwatch after seeing it on the third-opinion. The site is easy to navigate and upon first glance doesn't look any worse than some of the other sites wikipedia links to (other links contain advertising, that is nothing new). They also have links to websites seen as consumer-friendly such as bankrate and the center for responsible lending. The site looks as if it has some potential. Regarding Wiki policy on the matter, I think the reasons for its exclusion are clear, "you should avoid linking to a website that you own, maintain or represent, even if the guidelines otherwise imply that it should be linked."[1]. The site doesn't add anything significant to the article, I find its reviews and links currently dont " provide a unique resource beyond what the article would contain if it became a Featured article."[2] Furthermore, the fact that only affiliates are reviewed leaves a bad taste in my mouth. I support its deletion from the article. --Dscarth 20:21, 26 May 2007 (UTC)

I have written a third opinion on this issue here. --User:Krator (t c) 21:00, 27 May 2007 (UTC)

[edit] Why No Actual Lender Links?

Other wikipedia articles in the financial sectors link to the top banks in each sector. Why is payday loan different? Are link spam concerns affecting the quality of the article?

Feel free to add them if you like but please make sure they are legit. The Payday loan page gets many spam links added to it. If the link looks the least bit suspect, it gets removed. Monkeyman 1 July 2005 01:02 (UTC)

[edit] U.S. Centric

"...but in most states payday loans are legal..."

US-centric bias, should be fixed?

Seems OK to me. Kushalt 06:45, 18 December 2007 (UTC) Never heard the term used outside the US. --Kushalt 12:54, 18 December 2007 (UTC)

If the subject is one of use outside the US, then yes, it should be fixed. However, I'm guessing this isn't a worldwide phenomenon. Thus, there isn't really anything to fix. -- JeffBillman (talk) 03:13, 29 March 2008 (UTC)

[edit] Payday defense

Payday Loans - Consumer Driven Industry Most editorial commentary is very biased about this service but it must fill a need or the industry would not work in a market driven economy. If there is NO need, then there are NO payday lenders.

You make the assumption that the need is organic; it is artificially created, nurtured and sustained. NoGutsNoGlory (talk) 00:48, 30 March 2008 (UTC)


On 5/18/05 there was a US network broadcast on 60 Minutes . In their editorial they blasted the payday loan industry, but anyone who knows about this service is VERY aware it's an emergency loan and should not be used for long-term usage. It is intended to help those in a bind and the fees are lower than bouncing a check at the bank or paying for overdraft protection.

The 60 Minutes article is/was a very subjective view of someone who thinks they know what's in the best interest of all consumers! What about all the people who use this service like it should be used? I know there are payday lenders who have honest and favorable comments published on their websites. For example, you can find positive comments from people that have benefitted from payday loans from www webcashadvance com/testimonials.html (URL broken to prevent SEO). The payday loan industry also had a professional organization CFSA where consumers can find out more from the positive point of view.

It seems almost a shame not to link to the CFSA site directly from the article. It's highly relevant to this subject, but also highly POV. What a dilemma! Matt Fitzpatrick 06:52, 26 July 2005 (UTC)


I think I agree that a lot of editorial material is biased against it. Alot of the information in papers and such are wrote by people who seemingly have no understanding of financing and basic economics. Is there any editor on this article who is actually in the lending industry or taken courses on banking? Or is this article being written off of snippets in the Times and 60 minutes?Cool10191 (talk) 16:24, 3 March 2008 (UTC)

[edit] Details of "illegal" payday lending

Payday lending isn't legal or illegal per se in various states, as I wrote in the article. It's a little more complicated than that. More precisely, most states have usury limits: hard interest rate caps calculated strictly by APR. Therefore, short term, low principal lending in general is highly unprofitable in those states; even states with loose usury limits like Colorado (45%) aren't even close to what a payday lender needs to operate.

"Rate exportation" is the mechanism by which payday lenders can operate profitably in all states. Rate exportation works like this: by funding loans from an out of state bank, the transaction is governed by the rules of the state that bank is chartered in. Rate exportation was established by the unanimous 1978 Supreme Court ruling Marquette v. First of Omaha, 439 U.S. 299. This is the same mechanism by which credit card issuers in South Dakota and Delaware-- states that abolished usury limits decades ago-- can still offer credit cards to anyone nationwide.

I think this nuance is worth mentioning, but I'm not sure how to express it simply and concisely. It's a bit convoluted! Matt Fitzpatrick 06:43, 26 July 2005 (UTC)

[edit] Conflict of Interest flags for CFSA pr firm

Please note that Special:Contributions/209.183.197.163 traces to Dezenhall Resources, a Washington DC PR firm hired by the payday loan industry to advance its interests[3]. Please see conflict of interest for more information on advertising and paid edits, along with visiting dezenhall.com or SourceWatchto view their particular strategies. Flowanda 03:04, 17 May 2007 (UTC)

[edit] Content removal -- please discuss

Content concerning collection issues was recently removed/edited, and I'd like to start a discussion here about its relevance. The information was adequately sourced, but the source was a four-year old document from house.gov. Content was added and deleted by Special:Contributions/65.201.145.186, which resolves to a Check into Cash IP. Here's the content before: "In many instances the payday lender can use aggressive collection practices that include threatening criminal prosecution for writing a bad check—despite the fact that lenders routinely accept post-dated checks drawn on accounts that have insufficient funds." Source (removed tags): http://www.house.gov/apps/list/press/ba31_democrats/PYDY0319.html U.S. House of Representatives Committee on Financial Services Democratic Office. And the edited content: "A payday lender can only legally use collection industry standard collection practices. These do not include threatening criminal prosecution for writing a bad check." Flowanda | Talk 00:53, 17 August 2007 (UTC)

[edit] Facts of repayment

The article reads, "Most payday borrowers pay back the loan when due."

This sounds like it is from the industry - shoudln't there be a source for this? For some reason, I doubt that most pay back the loan when due. —Preceding unsigned comment added by Jt9636 (talk • contribs) 18:28, 7 September 2007 (UTC)

Obviously most pay it back when due, otherwise the payday lenders would all go bankrupt. Usually the consumer has to show a paystub or some sort of proof that they are getting money to cover the check they are writing. So it pays off. hen due and must either default or “roll over” the loan."

Google is your friend. "According to a 2004 study by the Oregon Department of Consumer and Business Services, 74% of borrowers report being unable to repay their payday loan when due and must either default or “roll over” the loan." [4] Now, perhaps it's just me, but 26% is nowhere near "most". You've admitted to working for a bank that offers cash advance loans, so why exactly are you subjecting yourself to possible CoI violations? Cougar Draven (talk) 13:41, 12 February 2008 (UTC)
If they roll it over then they pay it with a fresh loan, so their obligation is met for another pay period. 74% may be unable to pay it off, but what percentage of that actually does not take another loan? CoI violation? Almost all banks have been regulated out of payday loans, that is the problem with the industry now, it is no longer in the hands of responsible institutions. I think I am ok there. The accurate awnser is what percentage are totally unable to pay back their even without doing a "roll-over". It is not the fault of a financial institution if a customer takes a loan knowing he will not be able to pay it back yet claiming that he can.. (I did not add the original quote above). So of course a high percentage pay the loan back every week. Just sit down and do the math - If I am charging 15 per 100 loaned, and I want to turn a fair profit then only about 12% can be defaulting. Does that make better sense? You can use that sort of a number for any fee to determine about what the defaulting rate is. The fee is directly related default percentage. Calculate it like this: fee = defaulting percentage + profit. Or do it in revese, if 74% of loan takers are not paying back the money there is a real story! lol, That would make the loan backer very generous indeed, almost charitable. ThanksCool10191 (talk) 17:40, 1 March 2008 (UTC)
One other thing, I am not disputing that this is a poor method of obtaining credit. I am arguing with the premise that it is a high profit, predatory product.Cool10191 (talk) 17:56, 1 March 2008 (UTC)
Please, spare me the terminology. It doesn't matter how a PDL company terms it, if someone owes $100, and they can only pay the $30 interest, they still owe a $100 loan, regardless of whether the PDL terms it a "new" one or not. And please stop the strawman. I never said anything about fault or profit. The entire profitability of payday lending comes in rollovers. If someone can afford to pay $130 in two weeks, the company makes $30. If they can't, and it rolls over four times, then gets paid down by $50 every two weeks, as is standard, the total amount paid back is $265, for a total profit of $165. A 165% profit on 74% of customers is high-yield, IMHO. Cougar Draven (talk) 20:08, 1 March 2008 (UTC)

Could we move this back to the article? The talk page is meant to discuss the article, not the subject, the industry/competitors or debates that constitute original research. If information in the article needs to be changed or better sourced, then what needs to done next? Flowanda | Talk 00:29, 3 March 2008 (UTC)

I am not trying to argue, I am trying to point to the fact that the statement that most people repay their loan is accurate.. If they repay it by financing a new loan or if they come up with the money on their own does not matter, the fact is they repay it..The statement is accurate. See my previous comments. Look at my oringal reply, i said that the problem is when they do get stuck in the cycle and are unable to get out of it. If you want to change the article to say "most customers repay their loan by financing a new one" i think that is fine, but to say that most do not repay their loan is inaccurate. And if you pay off one loan by financing another it IS a entirely new product. See refinancing. - Cool10191
And I am trying to get that very point removed, because equivocation does not the truth make. Cougar Draven (talk) 10:57, 11 March 2008 (UTC)
But it is true, it is not equivocation. This artcile must adhere to typical lending principles even though it is a controversial loan product. If you refinance a house, you are not extending an existing loan, you are creating a new loan, paying of the old, and starting over. It is a new product, just the same as refinancing a PDL product. And PDL companies are not equivocating, it is a matter of accounting. Prices are set by the risk taken on an individual loan, not on a loan and ten refinances. Also please read my FDIC reference, if a person takes a PDL from a bank, and if they get in the cyclce and take, i think it said 5 PDLs in a row, the bank is instructed to offer the customer instead a longer term loan that they can make payments on at a lower cost because getting in the cycle is UNFAIR to the customer. Please.. I understand where you are coming from and how you are looking at this. But your mistaken - most loans are repaid.Cool10191 (talk) 12:35, 11 March 2008 (UTC)
If you re-finance a house, yes, it is a completely new loan. However, a payday loan is not a house. Also, if a PDL company advertises their product as being not renewable, but payable by a new loan at the end of the loan term, then I wouldn't be disputing it. However, it is typically portrayed as being the same loan everywhere except the terms of service of the loan itself. Cougar Draven (talk) 14:46, 11 March 2008 (UTC)
If it is in the terms of the loan contract, is that not the highest source? If it is portrayed as renewable everywhere EXCEPT the contract that is signed, then it is not renewable - because the contract says it is not renwable. The contract is reality, everything else is just perception. This will be my last reply on this thread. I've added what I am trying to convey to the artcile itself. If you dispute it that is fine :) Cool10191 (talk) 15:21, 11 March 2008 (UTC)
And to address your other point. 165% profit on 74% of customer is not at all a good profit margin because you are leaving out the fact that the other 26% are not paying back at all. So if on 74% they are making a $250, using your numbers, then on the other 26% they are loosing around $500 each.. Do this with 100 loans - on 74 you profit 18,500. On the other 26 you loose 13,000. So the profit is actually 5,500, or 55 per loan, or 11% of each loan amount... Then you figure in operating costs, are you still going to say that it is unfair? This is basing it on $500 loans. Do a little more research on Financing. - cool10191
I can work with this. Let us assume $15 per $50 loaned, as was in my original point. Given a $500 loan, the finance charge comes to $150. Let us assume that there are 100 customers, all of whom obtain $500 loans. 74 of them extend the loans four times at a cost of $150 each time, and then the total loan is paid down by $50 each time after that. All told, that's $150 x 4 + ($150 + $50) + ($135 + 50) + ($120 + $50) + ($105 + $50) + ($90 + $50) + ($75 + $50) + ($60 + $50) + ($45 + $50) + ($30 + $50) + ($15 + $50). Let me do some math here...If my math is correct, that means the total amount taken in for each of these 74 people is $1925, for a total amount of $142450. If we assume the other 26 people pay nothing, the total lost is $13000, as you said. So total profit is actually $112450, or $1124.50 per loan, which is just over 200% profit. So clearly, it's a profitable business. Cougar Draven (talk) 10:46, 11 March 2008 (UTC)
Also, considering that the 26% figure were those who pay the loan back in one cycle, in this case giving $650 apiece to the company, or $16900 total, bringing the total profit up from $142450 to $159350, or $1593.50 per loan, which is actually over 300% profit per loan. In either case, the line about how "most" people pay back their loans should be removed, because sourced statistics have proven it. We can discuss profitability all day long, but if you wish to do so, please do so on my talk page. Cougar Draven (talk) 11:10, 11 March 2008 (UTC)
Finally to establish to you the lack of profitablity of payday loans to banks check out this http://louisville.bizjournals.com/louisville/stories/2006/02/27/daily30.html This is fairly common, most the banks have had to get out of the industry because it is so terribly unprofitable and risky. Please understand there is a difference between banks and pay day loan companies. And also check this out[5]. The FDIC has detailed regulations on banks offering payday loans and also PLEASE NOTE why the FDIC is wanting banks to not offer the loans is because THEY ARE UNPROFITABLE and risky, if they were not unprofitable to banks then they would not be discourages because the FDIC wants banks to make money. Also look at how the FDIC refers to APR, they say when the fee is EXPRESSED as an APR - you only officially use APR on annualized loans because you can't charge annualized interest rates on short term loans and turn a profit - there are APR caps. And if you want me to go on a complete tirade here.. just read the FDIC page, banks are instructed to write-off the loans after 60 days of no payment, there is no collections and no accumulating fees.. There is guidance about how to help people out the cycle of payday loans if they get in that, etc... Do you have an agenda courger draven? You seem to lack basic understanding of financing and lending. And one other note, instead of having the person take a payday loan would you rather pay day loans be banned and then have the loan taker starve to death on the streets? Consider the implications.Cool10191 (talk) 16:40, 3 March 2008 (UTC)
I have no agenda, but hey, since we're on that subject, WP:NPA. Also, your link specifies that the banks elected to stop providing PDLs because the FDIC sent them letters. Also, why did you edit your older comment to remove the "downward spiral" portion? Just curious. Cougar Draven (talk) 10:46, 11 March 2008 (UTC) EDIT: Apparently, I missed your point about WHY the FDIC sent their letter. And let me tell you, all I can see in the reasons the FDIC gave is "inherent risks associated with payday lending activities". Nothing about profitability. Also, I wasn't aware you could speak for the FDIC. Because that is what you appear to be doing here. Specifically "if they were not unprofitable to banks then they would not be discourages [sic]". So the FDIC apparently doesn't care about the sheer danger this poses to consumers who are down on their luck? I mean, seriously. Cougar Draven (talk) 10:57, 11 March 2008 (UTC)
Now that I think about it, I suppose I do have an agenda. My girlfriend has had several PDLs. In the process of helping her decide whether or not our financial difficulties were worth the risk, I did much research on the numbers given, and the legality of such numbers. And I suppose that I see the ability to make the Wikipedia project better by including actual truth in it, when the only other option is equivocated nonsense. Cougar Draven (talk) 11:10, 11 March 2008 (UTC)
LOL. Ok, i removed the "downward spiral" because.. it was a downward spiral and i decided to stay on topic. And as far as the FDIC sending them letters, WHY DOES THE FDIC SEND LETTERS LIKE THAT? Do you even know what the FDIC is? The sole purpose of the FDIC is to insure makes are profitable, it is their purpose. The only reason they interfere with banks it to ensure they remain profitable. And yes the link does site in the lack of profitablitily read it: they made about 215,000 on store front PDLs but lost over 500,000 on internet PDLs for a net loss of over $200,000 - IN ONE QUARTER. That is why the FDIC asked them to stop because it was not profitable. RISK = odds of loosing money... You are just being stubborn now or ignorant.Cool10191 (talk) 12:15, 11 March 2008 (UTC)
And did you even read the FDIC article?Cool10191 (talk) 12:18, 11 March 2008 (UTC)
Not yet, but I will do so. Cougar Draven (talk) 14:46, 11 March 2008 (UTC)
And your math in your first reply, again is flawed. For one, your profit cannot exceed the amount of the loan. Your math is flawed, mainly because you are considering refinanced PDLs as the same product as the original, when they are a NEW loan. If you are going to multply the loans by taken and paid back by 4, you also have to multiply the loans with loss by 4. Again.. read refinancing. I am going to leave this here now. I think any reasonable person with any understanding about lending will understand what I am pointing to here. Thanks for the challenge Couger Draven :) Cool10191 (talk) 12:24, 11 March 2008 (UTC)
"For one, your profit cannot exceed the amount of the loan." Are we talking legally, or realistically? Because legally, that's true. Second of all, I have no idea what you're even trying to say here. All I can tell you is that your entire argument rests on an assumption I have not made, and will not make, because it is at stake here. Begging the question will not win you this. Cougar Draven (talk) 14:46, 11 March 2008 (UTC)

[edit] revert by Flowanda

I am not sure what the problem was, and the line in the change history ("Rem comm links/info rem. bef") makes no sense to me. I am guessing that "comm links" are commercial links, and that perhaps the problem was my link to Wells Fargo, to describe their direct deposit advance program. I've replaced that with a link to a newspaper story about them; that actually seems less credible, but perhaps fixes the problem.

I'm not sure why the rest of my changes were reverted. Some of them were just formatting changes, for broken references. If anyone sees a problem, then please let me know, rather than just reverting. 24.91.134.90 22:43, 9 September 2007 (UTC)

And the newspaper story is wrong, as far as the current rates: they say 5%, but it's actually 10%, according to [[6]]. 24.91.134.90 22:53, 9 September 2007 (UTC)
I'm unclear on what the edit summary Flowanda left means entirely, but I think the new source is an improvement in some respects - the details it is incorrect about, though troubling from a general reliability view point, are not the assertions being supported in the article. Using an independent sources shows that the practice is of some notability, and not simply something that exists but is not necessarily significant. It might make sense to re-title the section so we're not specifically talking about the Wells Fargo service (I note the bizjournal article indicates that other major banks have not offered this service - but then their reliability is already suspect...) -- SiobhanHansa 00:39, 10 September 2007 (UTC)
A bit more digging suggests that bizjournal is more out of date than wrong--I can't find any evidence that other banks were offering such a product before 1997. Now there's lots, for example [7]. I can believe that the rate would have changed since ten years ago, though I can't find a reference for that.
I won't change anything, but wouldn't object to better references. I do think that what we have is better than nothing, though. 24.91.134.90 00:49, 10 September 2007 (UTC)
Actually, I changed it. I've renamed the section so that the heading isn't a trademark, and mentioned what seem to be the two biggest players in this (limited) market. I added a bit more about Wells Fargo's regulatory troubles; I'd be interested to see better references for that, there's probably more to report. 24.91.134.90 06:42, 10 September 2007 (UTC)

Has anyone looked at the actual edits made by myself and this editor? And the history of this page edits? And the relationship to what's being added again, complete with links not related to the article cited, but thankfully have all the registered trademarks listed? Please note that I did not use the same definitions as this anonymous IP editor did concering "revert", and I do not agree with the descriptions of the edits under discussion. And, by the way, "working paper", what does that mean? Anyone want to stroll through WP:RS on that one? Flowanda | Talk 04:09, 10 September 2007 (UTC)

Is this just a misunderstanding? The only reference to a working paper that I see is in the "Proponents' stance"; the only thing that I touched there was a mis-formatted reference. I did not write the text. Please check the diffs, and let me know if you still have concerns. 24.91.134.90 06:18, 10 September 2007 (UTC)
I consider revert to be a strong word, and I didn't consider or call your edits vandalism, so seeing a couple of discussions related to that bothered me. There is a strong history of drive-by editing from WP:SPAs and anonymous IPs from every which side, and many of the edits being made are those that have been removed in the past, especially external links to commercial sites and reports, white papers and other NPOV primary sources that, given the controversial nature of this article, should probably not be included. No offense, and this isn't aimed at you specifically, but given the activity lately and liklihood of more edits related to current issues related to military lending, etc., I'm asking for for more expert attention and additional editorial eyes. And again, I mean no offense to your edits...this was a trainwreck of an article that you are helping to sort out in ways that make my eyes cross, so I would encourage you to register and continue to help sort things out -- this is a subject that seriously affects a number of people's lives and needs the most rigorous of attention. Flowanda | Talk 02:11, 11 September 2007 (UTC)
Thanks, and no worries.
It would be interesting to see contributions from an editor with better knowledge of the current legal/regulatory situation. From the outside looking in, the details (the FDIC, which nominally doesn't care about anything except keeping banks solvent, is making social welfare type rules, while the rest of the federal government stays uninvolved) are awfully strange. 24.91.134.90 05:13, 11 September 2007 (UTC)
See, you just made my eyes cross. :) But thanks for waiting for input from the editors involved in the finance project...since this is an area with a great deal of lobbying and government activity, is there another project area we should approach for feedback? Flowanda | Talk 00:04, 13 September 2007 (UTC)

[edit] Resources and research that need discussion and better sourcing

These resources added to an external links section are all linked to a trade association website; I moved them here to discuss their use as resources/references and, if so, to find direct links:

The Vertitec study should probably be considered as biased as any of the others (pro and con) listed on the main article page since the study was conducted by a for-profit company that serves the payday lending industry. Veritec Solutions is a "regulatory services company" -- its website says state agencies are its customers and not payday lenders, but states that use it as a vendor require payday lenders to be licensed through Veritec and pay fees to use the database (which can be passed along to the consumer). I only did a brief search, so others more familiar with this area may have better input or more accurate way to describe it in the main article space. Here's the direct link to the study: http://www.veritecs.com/CRL_Whitepaper_Analysis_R1.pdf Flowanda | Talk 07:57, 23 September 2007 (UTC)

[edit] Goodwill reference and loan example

I moved this here for discussion...it's an example about non profits having lower fees, but it is the kind of specific example that's constantly being removed:

An August 2007 New York Times article, "Nonprofit Payday Loans? Yes, to Mixed Reviews," [8] details a payday loan alternative being offered by the Goodwill, a non-profit, tax-exempt charity. Goodwill charges customers $9.90 per $100 borrowed for their “Good Money” payday loan. This equates to 252% APR. The goal is to break even. For-profit payday lenders charge an average of $15 per $100 borrowed while also paying taxes, employee salaries and health care, rent and overhead costs.

I haven't yet checked the article to see if all the information listed above was sourced in the article. Flowanda | Talk 09:35, 23 September 2007 (UTC)

[edit] What is the *real* interest rate?

I had never used a payday loan service, but ran across a posting today on the Internet where a fellow was citing a very high interest rate. Visiting Wikipedia, I can see that the same kinds of interest rates are reported. But, what is interest and what is a fee? I think it's inreasonable to take what one would call a service charge and call that "interest" and then inflate it to an APR value that is insanely high. If you look at any money transfer service (e.g., Western Union), about the lowest rate to simply send money is $11 per $250 or so. If I wire money from my bank account, they charge $15 for a domestic transfer. Granted, that's not a loan, but a fee is a fee. Fees should be kept separate in this discussion. What are the actual interest rates these payday companies are charging? I do not think the article properly reflects this value. Keep fees separate, otherwise the information is entirely misleading. —Preceding unsigned comment added by 75.182.115.36 (talk) 03:20, 13 December 2007 (UTC)

Agreed that it would be nice to see fees and interest broken out separately, but as a general rule, people who use payday loans only consider the overall cost in dollars (and of course date due) when making a decision. There is some discussion of fee/interest terminology over at Loan shark, but IMO people see payday loans in a very practical light, as not unlike borrowing from the barracks six-for-five man – for every $5 he lends you, you give him $6 back two weeks later. There's not much consideration of the interest rate; you either need the loan or you don't. --CliffC (talk) 04:59, 13 December 2007 (UTC)
The problem is, a $100 one-week loan costs the same whether you're talking about a ten dollar fee and 0% interest or no fee with 10% weekly interest, and there's the same payment schedule. Keeping what the company calls a "fee" separate from what the company calls "interest" reflects only the company's POV on the matter, and not reality.--Prosfilaes (talk) 00:35, 25 January 2008 (UTC)

If only there was a website that would break down all that information for us in a way that was so obviously objective and extraordinarily unbiased that it exceeded even the spirit of WP:NPOV beyond any rational objection of WP:COI and WP:SPAM. Is there such a website in existence that we can confidently and immediately add to this article? Flowanda | Talk 06:37, 13 December 2007 (UTC)

Hey guys. I work at a bank were these loans are offered from. Reading directly from our loan application for a $500 cash advance:

  • Check Printing Fee: $1.99 - Paid to Loan Agent.
  • Bank Service Charge: $5.99 - Fee for processing the loan.
  • Finance Charges: $52.50 - 10.50 per $100.

In addition to this, if the client will cash a check at the location, they will also be charge a check cashing fee of 3-7% of the check amount. Cool10191 (talk) 13:43, 29 January 2008 (UTC)

As stated above by Prosfilaes, that's POV. You can term it whatever you want; it doesn't change what it is. Now, whether is is interest or a fee really doesn't matter. NSF fees are not interest, but are often compared as an APR. Along these lines, the two terms are interchangeable. Cougar Draven (talk) 13:53, 12 February 2008 (UTC)
OK. So we use your figures. I assume this is a two week loan? Cheque printing / cashing fees are questionable (especially when based on the dollar amount), but I'll leave them out for the sake of argument. Processing charges are almost always included in calculations of APR. It's money you're paying to obtain the loan. So $58.49 on $500.00 is 11.7% on a bi-weekly basis, which becomes about 304% on an anual basis. Even excluding the processing fee, the straight "finance charge" works out to 273% per annum. --142.242.2.248 (talk) 17:31, 15 February 2008 (UTC)
It just doesn't matter if the figures are "your figures", "my figures", "CFSA's figures", "DoD figures", etc., -- none of them should be used as citations unless they are secondary sources in a discussion that uses mainstream references meeting Wikipedia policy for verifiability. It's fine that the article includes any legitimate controversy about fees and interest rates, but this article (including the talk page) is not the place to debate or solve arguments (please see original research). If you have issues with content included in this article, please either provide sources for your argument, or ask for help and provide any sources you have that would help other editors in helping to find mainstream references to source the content. Flowanda | Talk 11:30, 16 February 2008 (UTC)
You can calculate the APR how ever you like for your own purposes, but finance charges, or interest, on loans like these are based on risk. These loans are similar to RAL loans in that way. When a bank figures what fees (at least my bank) they are going to charge they first setup service, the service fees are the actual cost of offering the product, what i costs to print the check, wire the money, etc. The finance portion, the actual interest or APR is what the profit will be - but figured into that interest rate is the risk factor. If 9% of the loans paid out are bad loans that no money is made on than the interst rate has to be high enough to still make profit from the other 85% and cover the losses from the bad 9%. (5-9% is a pretty accurate number of the amount of bad payday loans, it varies by area) So if you figure that of every 100 dollars loaned out, 9 dollars will not be recovered, you have to build into the fees a recovery mechanism. This is why the fees seem so high, that kind of a bad loan rate is unheard of in most annual loans, in fact banks would close if they have that kind of bad loan rate. It's like insurance, if no one ever made an insurance claim than the insurance premium would be very cheap. So to recap what I said, the service fees are the actual cost of the loan, the finance charge is profit + risk factor. So on a 300 dollar payday loan using the calculation above a bank charging those fees could expect to average $10-20 profit. That doesn't sound so bad does it? Most banks are not about getting rich quick, they are about slowly maintaing there buisness. It is when the government regulates the banks out of the industry that you see the prices go really crazy. I am not saying the APR is not as high as you speculate, i was just trying to answer the fee breakdown question, it doesn't really have a big impact on the APR, it is still very high. My bone here is that high APR does not translate to high profits, which some part of this article seem to insinuate. The people are not being gouged or taken advantage of in most cases. And you need to add a something here to differentiate these loan sources - some are backed by a bank where the client signs detailed applications because of the FDIC etc. Others are backed by the buisness from where they are getting the payday loan, not a bank, and therfore not regulated by the FDIC but by local usury laws which in most states are lax. I think that is a point worth mentioning. I don't know where to find a source to say all that - it is just reality. Cool10191 (talk) 17:41, 16 February 2008 (UTC)

[edit] citation for interest rate

the link http://www.newsweek.com/id/41906 talks about 300 to 500 percent interest rate. is this citeable?Kushalt 06:51, 18 December 2007 (UTC)

[edit] Disputes

From Article - "The industry's fast-paced growth indicates a highly profitable business model." and "Critics concede that some borrowers may default on the loans, but point to the industry's pace of growth as an indication of its profitability."

The reference does not prove this. The fast paces growth is more closely linked to banks being forced out of the industry and Pay Day Loan companies moving in to fill the gap of services once provided by banks. And just because a critic says something does not mean it should be included here, it has to be based on facts.Cool10191 (talk) 17:05, 3 March 2008 (UTC)

...you're serious. If you believe that the growth of the PDL industry, despite quite a few states legislating them out, and the House of Representatives on record quoting a Representative as saying PDL company practices are "offensive" and "malicious", then let's see your source for your claim. Cougar Draven (talk) 15:13, 11 March 2008 (UTC)
I don't have a source other what I can tell you, i prove my facts are true, but I am unaware of any study that concludes the same thing. Almost every single bank has left the industry in the last five years and I have watched these other companies move in and take over practically overnight. No one cares to write news articles about this, why would anyone, its not important really. My bank made a decent profit until we implemented the FDIC regulations, then our fair profit dropped to staggering losses and the whole division was cut after two quarters. I say from direct experience it is profitless now for a bank. Every bank in the industry experienced the same thing, none were able to get around it. I think that SBBT in califorinia is the only bank left, but i could be wrong - and they had to implement super tight lending criteria and they are barely eeking out a profit from what i hear.Cool10191 (talk) 01:30, 12 March 2008 (UTC)

I am disputing this statement in the article "Other options are available to most payday loan customers". Most customers do not have any other short term option. The reference for this statement does not exist. According to the FDIC, who is more credible than any other source, [9] , most customers have no other credit options. And the alternatives listed are options for maybe a small part of the loan customers, but if so then honestly ask yourself why the person is taking a pay day loan? Are people that stupid?

I also dispute this "Critics say payday lenders' processing costs are significantly lower than costs for mortgages and other traditional loans. Payday lenders usually look at recent pay-stubs, whereas larger-loan lenders do full credit checks and making a determination about the borrower's ability to pay back the loan." Critics may say this, but it is not true, and what critics are saying it? Pay Day Loan Companies may not check credit reports, but banks are required to checks consumer credit reports by the FDIC. They are also required to follow adverse action procedures on failed loans which causes the bank to spend money but not make an income on that loan. At the very least it should be mentioned that this is not true in the case of FDIC regulated institutions.

It also bothers me to see the only thing with a citation on this whole article is: "Furthermore, most of these programs offered by credit unions have ended due to the high default rates of borrowers." The article concedes and gives the benefit of a doubt to all the anti-PDL positions but the one statement that shows how unprofitable this product is to the banks (which completely undermines the theory that the loans are predatory) you question it.Cool10191 (talk) 14:12, 5 March 2008 (UTC)

"who is more credible than any other source"? I'd really rather you didn't appeal to authority. Yes, they're credible, but they're not more credible than any other source. They're credible from an administrative and legal perspective. Wikipedia is not a legal dictionary. We cater to the layman and the consumer, as well as to the lawyer and the bank manager. (That, and the lawyer and the bank manager would already know these things.)
I'm fine with including the legal jargon. I'm not fine with not including an interpretation of said jargon that will be readable by the layman. For instance, hearkening to our above dispute, I'm fine with including your interpretation of payday loan rollovers as new loans, but only if a statement were to be included that that is an industry perspective, and including my statistic and source.
Finally, I'd just like to point out that you've admitted that you work for a bank that provides payday loans. To continue to provide edits that, like it or not, skew the facts in favor of the industry, without providing for a consumer interpretation that is fair and impartial, is a conflict of interest. I have no problem working with you and other editors to provide a fair, impartial and accurate solution that we can have a consensus on, but I will need your agreement for that. Cougar Draven (talk) 15:13, 11 March 2008 (UTC)
I am fine with most of the article, it just seems to me that certain parts are completely blind to the major shift in the industry in the last few years and how no one seems to equate that directly to the current problem with it. You know these products have been around for decades, isn't odd that it just becoming a big problem after the banks get kicked out? As it stands this article is horribly unfair to the banks that once dominated this industry. It sites references that apply on to a segment of the PDL industry (non=bank PDL companies) and applies it to the whole indstry as if there was no difference. Nowhere in the entire article is any distinction made between a bank and a PDL company and their different criteria, regulations, etc. Cool10191 (talk) 01:32, 12 March 2008 (UTC)
I'll have to re-read the article to be sure, but if you're right, and it doesn't make a note of the facts regarding banks, then I definitely think something speaking on that should be inserted. Cougar Draven (talk) 12:22, 12 March 2008 (UTC)

[edit] FDIC and PDL

Hey Check this out: http://www.fdic.gov/regulations/safety/payday/ this is offical FDIC guidance for PDLs to banks. In the footnotes it says typical interest is 200-400% with charges between 10-20 per hundred loaned. It also gives a long list of compliance that banks follow, guidance for helping people out of the cycle of PDLs, warnings on the profitablity (or lack thereof) for PDLs, as well as citing research that most people who take PDLs are people who access to no other form of credit. It also instructs banks to charge-off loans more than 60 days delinquent (this were you claim it as a loss and cease collections). Read it and you will see how responsible the banks who offer this product are. If they have the FDIC seal they follow these rules. Note, not all payday loans are financed by banks. This article links to alot of "news" stories that try to interpret this and other things, why not link to the real thing itself?Cool10191 (talk) 18:11, 4 March 2008 (UTC)

Actually, I would argue that most of them are not financed by banks, because simply, in quite a large number of states, those interest rates and PDL collection practices are outlawed. And that, I think, is the source of the dispute we've been having. I'm sure many, if not most or all, banks are reputable in their payday lending practices. However, my experience with PDL companies, especially ones not licensed to do business in the state I live in, says otherwise. Cougar Draven (talk) 15:16, 11 March 2008 (UTC)
You are right couger draven, most of the payday loans are no longer financed by banks, that is the problem! Lack of regulation of the companies now offering them. The fed regulated the banks out so they can't make money and now sleezeball companies move and prey on the innocent! The bank need to be let back in to fix the situation or they need to be banned altogether or the PDL companies need to be also brought under FDIC regulation.Cool10191 (talk) 01:23, 12 March 2008 (UTC)

[edit] FDIC discussion

I have moved this section to the talk page because its sources seem to be primary sources or those not meeting WP:RS. PLIwatch.com is discussed at the top of this page; the bizjournal article appears to be a press release and the other sources are primary or organizations that shouldn't be used without objective, third-party sources cited as reliable sources.

[edit] Effects of FDIC Regulations

The FDIC, under pressure from consumer affairs oringazations and several state governmentsNC and TX Petition To Regulate PDL BankPetition to the FDIC to cease insuring First Bank of Delaware, has increased regulations and guidance to banks concerning payday loans offered through FDIC insured institutions.New FDIC PDL Guidance\Regulations. The new regulations has adversely affected the profitably and reputation of the major banks leading to several of them to pull out of the industry to appease the FDIC. Major banks to pull out include the First Bank of Delaware, Rehoboth Beach Bank,First Bank of Delaware Stops PDLs and Republic Bank and TrustRepublic Bank and Trust Stops PDLs along with a string of other minor banks offering the product. With few banks remaining in the industry most loans are now backed by private non-FDIC regulated companies.

There have been several requests about use of the talk page for discussing specific additions to this article, and not for adding discussions that, although may include links and assertations, do not help other editors make productive edits to the main space article.

And since there seems to be some discussion about disclosure and policy, please take a close look at conflict of interest guidelines and notability policy. Flowanda | Talk 00:06, 12 March 2008 (UTC)

Ok now, I have wrote alot of wiki artcles, hundreds. What is wrong with those sources and the assertion made? The sources are: Links directly to petitions recorded by the FDIC against payday loan banks requesting they (the FDIC) stop insuring pay day loan banks (these are offical documents from the state governments of texas and south carolina), then a copy of the new regulations themselves on the official FDIC website (a direct result of the those and similar petitions as sited in another reference)and then links to new reports of the three main banks leaving the industry because that they were asked to exit it by the FDIC due to inherent risks (ie risk of loosing money) and because of the reputation of the products? Please explain. Nothing there is controversial, specifically what there is inaccurate or needs more of a source than is provided? Based on those sources is it unnaccurate or unfair to say that most banks quit the industry because of lack of profitability and public pressure? And WP:RS is a guidline, not policy. I am fine with discussing though. As I see it that above paragraphs simply states facts and draws no conclusions. Cool10191 (talk) 01:13, 12 March 2008 (UTC)
If you've written hundreds of articles, then you should understand the intent of both guidelines and policies and be able to edit accordingly. Yet, you say you have COI and "inside knowledge", you assert that adding POV info and primary sources is non-controversial, you use sources that been proven -- on this talk page no less -- to not meet reliable sources guidelines, and you continue to post on talk pages extensive information, with links and lots of official-sounding phrasing, that has been repeatedly suggested is not helpful to other editors in making changes to the main space. We could get all super official like, and I could claim WP:AGF is also "just a guideline", but then we're all still left with super-sucky article on a sensitive, complex and controversial subject that affects the everyday lives of a lot of real-life, breathing people, not just something's bottom line. Flowanda | Talk 02:37, 12 March 2008 (UTC)
Yeah it affects the lives of people like me who have lost good jobs because people put out inaccuratele information with the purpose of tarnishing respectable banks that are just trying to offer a product that customer want. It is a story that people take loans when they can't repay, why not when their lack of repayment costs people their jobs? Hundreds of jobs are lost at banks because articles falsely claims banks are predatory with these products when they are not. I say again this article needs to distinguish banks from the other drabble is makes this industry look bad. Everything i have posted here is has been to prove that banks are making little or no money and are being driven out by the FDIC and consumer affairs organizations. And it has not helped the problem at all it has only gotten worse because now the government has far less regulatory control over PDL companies. I beg for you to prove to me otherwise. And i do write articles, typical historical things that state facts and make few assumptions - how does my edit make an assumption? It states only fact. I have not made this article sucky and have only added two edits, both legitimate. And how are those news releases POV? If a company says it no longer offering a product or it lost money on it why does there need to be third part verification? Cool10191 (talk) 02:53, 12 March 2008 (UTC)
My comments were related to why your excessive edits to this page were not helpful in improving an already bad article (which I have commented on before when seeking expert help). I think in this particular case, you are not going to be able to objectively edit or add unbiased information useful to other editors. Flowanda | Talk 03:28, 12 March 2008 (UTC)
Ok, I will leave you and this article alone. I will go enjoy my newly awarded barnstar and edit articles where knowledge is appreciated.Cool10191 (talk) 12:03, 12 March 2008 (UTC)

[edit] Payday Loan Law Changes In Oregon

In 2007, the state passed laws there that capped the amount of interest a payday lender can charged, and also dictated how much time must elapse before a new loan can be made. Because of that most payday lenders closed down business and left the state. —Preceding unsigned comment added by 15.251.169.69 (talk) 16:01, 14 April 2008 (UTC)

[edit] "US-centric", redux

Please stop adding the globalize tag to this article, or any of its sections, without showing cause on this talk page as to why the article is "US-centric". Yes, this article focuses on the US, but for good reason: This is an American topic, either primarily or exclusively. To suggest that this article could be "globalized" without offering any sources to substantiate this practice outside the US is to engage in original research. -- JeffBillman (talk) 04:09, 9 June 2008 (UTC)

Pay-day loans exist in the UK, I see them advertised all the time. See for example [10] [11] [12], which were the first three results for "pay day loan" at google UK. There was even a petition to the UK Parliament which mentions over 200 branches of pay-day loan company Moneyshop. The Downing Street petition acknowledges that pay-day loans have an American heritage (which, I admit, is something I was unaware of before tagging the article), but given that pretty much every UK high street (at least in poorer areas) seems to have shops advertising pay-day loans, I don't see why this article should focus exclusively on the US phenomenon. It certainly seems that not only do pay-day loans exist in the UK, but reliable sources verify this fact. Rhebus (talk) 12:45, 9 June 2008 (UTC)
Okay, then add info to the article. Tagging the article as needing a worldwide view puts us in one of two unfortunate positions: Either we are led on a wild goose chase looking for examples outside the US which to our knowledge may or may not exist, or we are forced to assert a negation. It's a lot easier simply to provide info of practice outside the US if one is aware of it, which apparently you are. The globalize tag is only helpful when examples of usage outside a given country should be patently obvious. -- JeffBillman (talk) 14:13, 9 June 2008 (UTC)
I changed the lede in the section you tagged from "Payday lending is a controversial practice and faces both legal battles and public perception challenges in nearly every state," to "Payday lending is a controversial practice and faces both legal battles and public perception challenges in nearly every place where it is practiced." This I believe addresses the immediate concern that the section is "US-centric"; however, we will need to provide examples outside the US. -- JeffBillman (talk) 14:25, 9 June 2008 (UTC)
Added a source of a UK parliament early day motion criticizing payday lending. I think that's WP:V, WP:N and WP:RS :) Having said that, the whole article is US-centric. The second paragraph begins "Though payday lending is primarily regulated at the state level.." clearly assuming US without explaining that this is a US-based phenomenon. I ought to be doing work, so I'll reword as and when I have time, but I don't feel that the article is satisfactory yet. Rhebus (talk) 14:53, 9 June 2008 (UTC)
I'll put the tag back on the article as a whole. With the sources you provided, examples of usage are now-- as I wrote earlier-- "patently obvious". That is, with Parliament criticizing the practice, it's patently obvious that this occurs outside the US. So it's now fair to say the article does not represent a worldwide view. -- JeffBillman (talk) 19:41, 9 June 2008 (UTC)
Thanks, that's very gracious of you. I'll try to find more UK sources and put them in the article; however, it seems much easier to find payday loan companies than it is to find sources talking about payday loan companies. :( Rhebus (talk) 08:30, 10 June 2008 (UTC)
...in particular, I can't find any "general" sources about payday lending in the UK which could go in the article introduction; no overviews, no details about regulation (I suspect they don't have payday-specific regulation and I don't think there are usury limits), no real statistics about how widespread the practice is except for the mention in the parliament early day motion that Moneyshop (or Dollar financial) has over 200 branches. Rhebus (talk) 09:02, 10 June 2008 (UTC)