Article source: http://www.journallive.co.uk/north-east-news/todays-news/2012/05/18/consumers-trapped-by-payday-loans-61634-30996453/

But while payday lenders say the loans help people ease through tricky points of the month, the research indicates many become trapped in a spiral of debt because they cannot afford to repay their loans by the agreed date, and so incur exorbitant penalty charges.

A third of people said they experienced greater financial problems as a result of taking out a payday loan, while one in five were unable to pay it back on time. A quarter said they had been hit with high, hidden charges for reminder letters and failed payments.

Which? highlighted the charges of lender QuickQuid, which has a £12 fee for a missed payment, while CashCall charges £30. Quid24 charges £25 for each of its first four letters to borrowers and £50 for a reminder on the 10th day.

Dan McDonald, chief executive of the Medway Citizens Advice bureau, said his advisers frequently came across people who have borrowed to pay the rent or mortgage and have been drawn into a tangle of debts.

“We recently advised a woman who had a £500 QuickQuid loan, £800 on a Vanquis credit card and £5,000 on an Aqua credit card, but still had £2,000 in rent arrears,” he said.

“Private landlords and housing associations are coming down very hard [on people who owe rent], and if people are desperate they will do anything they can to meet their rent payment. It’s only going to get worse with the new housing benefit caps.”

Which? said the debt trap was compounded with 57% of borrowers being encouraged to take out further loans, and 45% rolling over their loans at least once. Borrowers are usually required to pay the outstanding interest before a loan is rolled over, meaning a lender can make hundreds of pounds in profit from a small loan even if the borrower eventually defaults.

People were also potentially being allowed to take on credit they couldn’t afford. Eight out of 34 companies do not carry out credit checks as part of their approval procedure, and nearly two-thirds of borrowers surveyed were not asked about any aspect of their financial situation apart from their salary.

Some payday loan websites failed to provide any terms and conditions, and many of those that did had little or no information about a borrower’s rights and obligations. or references to free debt advice. Fourteen out of 34 lenders failed to inform consumers about their complaints procedures.

John Lamidey, chief executive of the Consumer Finance Association, a trade body which represents several payday lenders, said: “Despite the report’s concerns that payday borrowers may get ‘hooked’, the fact is that payday loans actually make up a tiny proportion of overall consumer debt.

“In fact, for every £100 of problem debt, payday loans never make up more than £1.20 of that debt, whereas credit cards and unsecured (mainstream) loans together account for between 60% and 70% of unmanageable debt.

“Responsible payday lenders, such as the CFA’s members, have no desire to lend to consumers that cannot afford to pay back their loans or trap them in a cycle of debt.”

But debt counselling charity the National Debtline said it had seen a huge rise in the number of calls about payday loans, from 288 in August 2010 to 1,547 in March 2012. The charity said it received 4,725 calls for help with payday loans in the first three months of 2012, 58% more than the previous quarter and 133% more than the same quarter of 2011.

National Debtline spokesman Paul Crayston said: “Payday loans are fast becoming a very serious problem in this country. We have strong concerns over the lending and collections practices of many payday lenders. We have even heard from people who have been approved for payday loans despite being insolvent.”

Which? executive director, Richard Lloyd, said: “It is unacceptable for this rapidly growing number of people to be inadequately protected from extortionate charges and dodgy marketing techniques. The regulator should properly enforce the existing rules that apply to this industry, but they must go further and impose a cap on the amount that lenders can charge for defaulting.”

Article source: http://www.guardian.co.uk/money/2012/may/18/payday-loan-borrowers-trapped-debt-spiral?newsfeed=true

A third of people experienced greater financial problems as a result of taking
out a payday loan, according to Which?

Payday loans are trapping increasing numbers of consumers in a downward spiral
of debt caused by exorbitant penalty charges, a consumer group has warned.

More than 60pc of people who take out payday loans are using the money for
household bills or buying other essentials like food, nappies and petrol, a
survey by Which? found.

The figures show an “alarming” picture of people trapped in debt
caused by penalty charges because they cannot afford to pay back the loan on
time, the watchdog said.

A quarter (25pc) of those who had taken out loans said they had been hit with
hidden charges such as high fees for reminder letters, and one in five
(18pc) were not able to pay back their loan on time.

A third of people (33pc) experienced greater financial problems as a result of
taking out a payday loan, and 45pc of them were hit with unexpected charges.

Which? said the debt trap was compounded with 57pc being encouraged to take
out further loans and 45pc rolling over their loans at least once.

A third of people (33pc) were bombarded with unsolicited calls, texts and
emails before they had even signed an agreement.

The investigation of 34 payday loans companies’ websites also found that
customers could face a £150 charge by one company, Quid24.com, if they
repaid their loan 10 days late. Most of the companies failed to show clearly
their charges or charged excessive amounts for defaulting.

Consumers were also potentially being allowed to take on credit they could not
afford, with eight out of 34 companies failing to carry out any credit
checks as part of their approval procedure and nearly two-thirds of those
surveyed not asked about any aspect of their financial situation apart from
their salary.

Some websites failed to provide any terms and conditions and many of those
that did had little or no information about a borrower’s rights and
obligations or references to free debt advice.

Which? is calling on the Office of Fair Trading to enforce existing consumer
credit and lending rules that already apply to payday loans firms and to
restrict the default charges that payday loans companies can charge.

Which? executive director Richard Lloyd said: “With 1.2 million people
taking out a payday loan last year, it is unacceptable for this rapidly
growing number of people to be inadequately protected from extortionate
charges and dodgy marketing techniques.

“At its worst, this booming £2bn industry can be seriously bad news for
borrowers who are struggling to afford food or pay their bills. People are
getting caught up in a debt trap, whacked with high penalty charges, or
encouraged to roll over payments and take out more loans at inflated rates.

“The regulator should properly enforce the existing rules that apply to
this industry, but they must go further and impose a cap on the amount that
lenders can charge for defaulting. The Government should also now explore
other ways to protect hard-pressed borrowers, including Australian-style
measures to cap costs and promote affordable alternatives.”

Consumer Focus director of financial services Sarah Brooks said: “This
research throws up some extremely troubling findings and poses many
uncomfortable questions about the growing payday loan sector. We have long
held concerns about the behaviour of some payday lenders and whether
consumers are losing out because this industry is not regulated strongly
enough.

“Our research in 2010 showed problems with inadequate affordability
checks and borrowers being offered multiple new loans or roll-overs on
existing loans. Which?’s findings suggest that problems have worsened in
this industry and that more borrowers are finding themselves caught in debt
traps. Millions are turning to these loans in the current economic climate
and it is usually those on lower incomes that suffer most.

“This work is timely given the OFT’s compliance review of payday lenders.
There is clearly a continuing problem with payday loans and this should give
further incentive, if any is needed, for the OFT to act quickly to protect
consumers from spiralling debt.”

Article source: http://uk.finance.yahoo.com/news/payday-loans-trapping-consumers-downward-051615129.html

Fixed mortgages for 30-year loan dips to 3.79 percent; 15-year loan averages. 3.04 percent. But record low rates on fixed mortgages have not ignited home sales.

By

Marcy Gordon, AP Business Writer /
May 18, 2012

A San Jose, Calif., home sits empty as it is put on the market for sale in this April file photo. The average rate for conventional fixed mortgages fell to new lows this week.

Tony Avelar/Staff/File

Enlarge

0

Article source: http://www.csmonitor.com/Business/Latest-News-Wires/2012/0518/Fixed-mortgages-new-lows-for-15-30-year-loans

The bill is scheduled for a hearing Wednesday in the Senate Banking Committee.

The bill cleared the state House two weeks, with only one more vote than needed for the required three-fifths majority.

Payday loans typically are small, short-term loans with high interest rates that effectively represent advances on a borrower’s next paycheck.

The bill does not cap interest rates for payday loans, as previous failed proposals tried to do, but it does limit borrowers to no more than five payday loans in a 12-month period and lenders to no more than four rollovers of an existing payday loan.

Article source: http://news.yahoo.com/del-senate-committee-consider-payday-loan-bill-152129714--finance.html

Opponents warned the Senate Banking Committee that the bill would do little to help consumers but instead would leave them with fewer financial options and could force lenders to lay off employees and move to other states.

Payday loans typically are small, short-term loans with high interest rates that effectively represent advances on a borrower’s next paycheck. While borrowers usually see them as a short-term fix to make ends meet, critics say high interest rates, combined with frequent loan rollovers, often leave borrowers trapped in a cycle of debt.

Unlike previous failed proposals to regulate the industry, the current bill, which narrowly survived a House vote two weeks ago, does not cap interest rates for payday loans.

Instead, it limits borrowers to no more than five payday loans of $1,000 or less in a 12-month period, and lenders to no more than four rollovers of an existing payday loan.

One of the bill’s more contentious provisions calls for the creation of a database that would be overseen by the state and which lenders would use to determine whether a potential borrower already has an outstanding payday loan.

Robert Byrd, a lobbyist for South Carolina-based payday lender Advance America, said the industry was not consulted before the bill was introduced and has been unable to reach a compromise with chief sponsor Rep. Helene Keeley, D-Wilmington, and other proponents of the bill.

“We don’t think it should be the business of the legislature to limit the choices for consumers as to what they can and can’t do,” said Byrd, adding that borrowers often turn to payday lenders after exhausting other options.

“They have no place else to go,” he added, suggesting that borrowers will turn to loan sharks if they can’t get the loans they need from payday lenders.

Carol Stewart, vice president of government affairs for Advance America, said the company’s typical customer makes about $54,000 a year, has gone to college, and may be living paycheck to paycheck.

Stewart suggested that payday lenders are a viable option for people who don’t want to risk the financial penalties for bouncing checks or paying bills late, or reconnection charges for utilities that have been turned off for nonpayment.

“They look at their options and make an educated decision,” she said.

Laird Stabler III, a lobbyist for Cash Advance Plus and the Consumer Lending Alliance, a trade group that includes payday lenders, noted that that the database lenders would have to use would include sensitive information about customers, including Social Security numbers. He said the lenders should be afforded some indemnification or immunity from liability if a security breach results in identity theft.

In a letter to committee members, Keeley, the primary sponsor, noted that the Justice of Peace Court system reported that payday lenders filed more than 2,400 cases for payday loan defaults last year. As of April, there have been more than 1,000 cases filed this year, she added.

“Even payday lenders have repeatedly acknowledged that payday loans are harmful if used long-term,” Keeley wrote. “When meeting with citizens throughout our state, it is appalling to see how a short-term loan product is becoming a long-term debt trap for so many of our constituents.”

The bill, which passed the House with only one more vote than needed for the required three-fifths majority, now goes to the Senate.

Article source: http://www.therepublic.com/view/story/c0a859e71ca942c2949f784de12dd7d8/DE-XGR--Payday-Loans/

Debra J. Harber, the University of Mary Washington’s director of financial aid, tackled a variety of questions about college loans during Tuesday’s Money Talk$ web chat on fredericksburg.com.

Below is an edited version of the questions and her answers. The complete transcript is available at: freder icksburg.com/News/chat3/Archive?chat_id=147.

;”My son has his student loans due. Here is the problem: He is working at a Dollar Store working 14 hours a week; some weeks it’s about 10 hours. We pay for two student loans. We can’t help with his part. Is there anything he can do until he gets a better job and can pay?

If your son’s loans are federal loans, he can contact the loan servicer to request a deferment or forbearance. This allows him to make reduced payments or interest-only payments.

Depending upon when he received his loans and the total borrowed, he may also be eligible for an income contingent payment plan. More information regarding payment options is located at federalstudentaid.ed.gov/. Just search on “Repayment.”

;”Our son has a 4.7 GPA and will be attending U.Va. in the fall. He is currently ranked first in his class. We own our own company; we are homebuilders. We have lived in Virginia all our lives. He got $5,400 from the Pell grant and $5,000 in loans. He got nothing from the state or any scholarships. We don’t know why he didn’t get any state aid. All of our paperwork was in early.

Since I cannot accurately address the awarding practices of another university, I suggest that you speak directly with the Office of Financial Aid at U.Va.

;”I am a 47-year-old female, FAFSA completed with a zero EFC. I want to begin and complete a degree in historic preservation at UMW. Where else can I look for financial aid to do this?

The critical form is the FAFSA, and be sure to submit required documents by the due dates. Additionally, complete and submit the UMW Scholarship Application located at adminfin ance.umw.edu/financialaid/scholarship-information.

;”My son is attending J. Sargeant Reynolds Community College for the summer program starting May 22. This is his first time attending college.

Article source: http://fredericksburg.com/News/FLS/2012/052012/05172012/701905?rss=local

The Frankfurt-based ECB said yesterday it will push the
responsibility for lending to some Greek financial institutions
onto the Greek central bank until they have sufficiently boosted
their capital. “Once the recapitalization process is finalized,
and we expect this to be finalized soon, the banks will regain
access to standard Eurosystem refinancing operations,” the ECB
said in an emailed statement.

The move comes after Draghi acknowledged for the first time
that Greece could leave the monetary union. While the bank’s
“strong preference” is that Greece stays in the 17-nation euro
area, the ECB will continue to preserve “the integrity of our
balance sheet,” he said in a speech in Frankfurt yesterday.

“A Greek exit was seen as an absurdity up to now,” said
Thomas Costerg, an economist at Standard Chartered Bank in
London. “It is gradually becoming the main scenario. The ECB is
prioritizing its balance sheet over monetary-union geography.”

Greece faces a fresh election on June 17 that may boost
parties opposed to the conditions of its international bailouts,
raising the specter of its exit.

Stocks Drop

European stocks dropped for a third day yesterday, to their
lowest level this year, amid growing concern Greece will be
forced to quit the euro. The Stoxx Europe 600 Index (SXXP) slipped 0.6
percent to 244.4 at the close of trading. The gauge has tumbled
10 percent from this year’s peak on March 16 amid continued
political uncertainty in Greece. The euro was little changed at
$1.2725 at 8:20 p.m. in Frankfurt last night. It has dropped
almost 4 percent this month.

A 130 billion-euro ($165 billion) bailout earlier this year
provided a 50 billion-euro fund to recapitalize Greek banks
after they reported losses from the country’s debt restructuring,
the largest ever. Greece’s four biggest banks are waiting for
European Union approval to receive 18 billion euros of bonds
issued by the European Financial Stability Facility for their
recapitalization, Imerisia reported yesterday, without saying
how it got the information.

The ECB can only lend to sound banks and therefore won’t
allow undercapitalized institutions to access its refinancing
operations, a euro-area official said on condition of anonymity.

“Pending the recapitalization of Greek banks that are
severely undercapitalized as a result of the” debt
restructuring, some “have been moved to Emergency Liquidity
Assistance,” said ECB said.

The so-called ELA is emergency support national central
banks can provide to lenders with ECB approval. The ECB
“continues to support Greek banks,” it said.

Policy on Hold

The ECB is conducting a comprehensive review of all its
policy tools and has no immediate plans to increase stimulus
even as market tensions mount, two euro-area officials said.

The review, mandated by the central bank’s six-member
Executive Board, intends to assess the effectiveness of its
measures, including the bond-buying program and long-term
refinancing operations, and is scheduled to be completed in June
or July, said the officials, who spoke on condition of anonymity
because the deliberations are private.

A third official said the ECB may not consider taking any
further policy action until July, and that the bank sees current
market tensions as a way of focusing politicians’ minds on
reform efforts. Bond yields in Spain and Italy have reached
levels that last year pushed the ECB to restart its bond-
purchase program.

A Greek exit could be “technically” managed yet would
damage confidence in the monetary union, ECB council member
Patrick Honohan said on May 12. A departure by Greece “is not
necessarily fatal, but it is not attractive,” he said.

To contact the reporters on this story:
Jeff Black in Frankfurt at
jblack25@bloomberg.net;
Jana Randow in Frankfurt at
jrandow@bloomberg.net

To contact the editor responsible for this story:
Craig Stirling at
cstirling1@bloomberg.net

Article source: http://www.businessweek.com/news/2012-05-16/ecb-stops-lending-to-some-banks-as-draghi-talks-exit

Sydney, Australia (PRWEB UK) 15 May 2012

A new commentary by payday-loans-australia.org, a website for short-term cash solutions, operated by Green Spiral Media, helps people determine whether to apply for a payday loan when they need cash to update their electronics. Since cash loans are quick and easy to get, people sometimes get them to make unnecessary electronic purchases.

Nowadays people often find it hard to keep up with the advancement of technologies and for that reason, sometimes apply for payday loans with the purpose of purchasing the newest electronic gadget without actually needing it. The payday-loans-australia.org article therefore aims to help consumers determine when to update their electronics with the help of a cash loan and when getting a payday loan will only put an unnecessary pressure on their budget.

Payday-loans-australia.org notes in its commentary that replacing an old appliance when it is on the verge of breaking down is usually a good idea; in this case, the consumer can choose when to apply for a payday loan with regards to his or her personal financial situation instead of being forced to get a payday loan when the appliance in question actually breaks down. As for electronic gadgets such as smartphones and laptops, payday-loans-australia.org advises consumers to consider what it is that they would need the gadget for.

The commentary then goes on to explore the “relationship” between payday loans and discounts on electronics. Since a lot of stores nowadays are offering deals on electronics, consumers sometimes apply for cash loans to take advantage of the discounts in question. In its article, payday-loans-australia.org advises consumers to calculate the cost for the payday loan and compare it with the discount of the electronic appliance that they want to buy. Naturally, applying for a payday loan would be a good idea when the discount is big enough as compared to the payday loan interest.

The convenience of cash loans is the main reason why people use them to buy new electronic gadgets. Nevertheless, sometimes getting a payday loan is a good idea whereas in other cases the purchase simply cannot justify the expenses related to paying the loan back.

To read the full article, or to get more information about short-term cash solutions, go to payday-loans-australia.org.

About Green Spiral Media

Green Spiral Media is a company operating a few leading information websites for payday loans. Those websites work with a selection of payday loan providers so as to offer convenient cash loan solutions to those in need. In addition, Green Spiral Media works to keep its customers informed about the most recent developments, trends and news in the field of short-term financing.

George Smith
Green Spiral Media
+44 (0)207 792 1929
Email Information

Article source: http://news.yahoo.com/payday-loans-australia-org-helps-consumers-decide-whether-130644807.html