Credit Union lending
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Here are the facts on Credit Union lending and how it compares with the 'evil' payday lenders.
CREDIT UNION (STRETCHPAY):
Credit limits/minimum advances of $250 (with an annual fee of $35) or $500 (with an annual fee of $70);
APR of 18% (or any higher rate the state sets): $7.50 for a 30-day loan. Total Cost $77.50.
EVIL, EVIL PAYDAY LENDER:
"expensive for-profit payday lenders that often charge $15 per $100" - That's from the Credit Union's page. Some payday lenders charge less, but that was the highest rate they could find.
Total Cost $75.00.
It's no wonder the CREDIT UNIONS and other lending institutions are behind this push to remove payday lenders from Ohio. They want to cash in.
The truth is right there. CREDIT UNIONS will actually be charging MORE than the payday lenders.
If you don't believe it, look at their own page:
http://www.ohiocreditunions.org/StretchPay/CUInfo.htm
CREDIT UNION (STRETCHPAY):
Credit limits/minimum advances of $250 (with an annual fee of $35) or $500 (with an annual fee of $70);
APR of 18% (or any higher rate the state sets): $7.50 for a 30-day loan. Total Cost $77.50.
EVIL, EVIL PAYDAY LENDER:
"expensive for-profit payday lenders that often charge $15 per $100" - That's from the Credit Union's page. Some payday lenders charge less, but that was the highest rate they could find.
Total Cost $75.00.
It's no wonder the CREDIT UNIONS and other lending institutions are behind this push to remove payday lenders from Ohio. They want to cash in.
The truth is right there. CREDIT UNIONS will actually be charging MORE than the payday lenders.
If you don't believe it, look at their own page:
http://www.ohiocreditunions.org/StretchPay/CUInfo.htm
You're comparing cost for a two week "payday" loan with the annualized cost of a loan from a credit bureau.
You need to compare credit costs using the APR (the government standard and basis for comparing credit costs) for each creditor.
In the example you provide, the annualized cost is 18% APR for a credit bureau loan (far under the 28% limit the paydayers claim they can't meet) and 391% APR for a payday day loan.
Trying to make mathematical points without apparently understanding what APR is makes your post a losing case.
The anti-payday lending crowd want to compare taking out loans as often as one could for an entire year. This is a terrible comparison. The whole idea is to help someone short term. Their need is short term. The individual seeks a loan due to an unforeseen need rearing it's head prior to them having the money to pay for it.
The amounts are real. You pay to join a credit union (if they let you at all), they charge an annual fee, and then they tack on the highest allowed rate in the state. In this case, you will paying MORE to the Credit Union.
This means there will be real people whom you will force to either seek an out-of-state lender, an internet lender, or will have to pay more.
This is a bad bill.
You apparently don't understand the basic math of calculating cost of credit and could easily be taken advantage of in a transaction involving credit.
Because APR is the cost of credit on an annualized basis it allows for a direct "apples to apples comparison" of such costs between different credit providers.
The only question needed to make a comparison between the cost of credit from the credit bureau and the cost of credit from the payday lender is which is higher 18% or 391%.
Until you understand the the basics of cost of credit and APR you will not have a clue as to why your arguments presented in this post as well as your comments about it are absolutely ridiculous.
Post Courtesy of Personal Money Store
Professional Blogging Team
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