At the moment if a customer loans $600 dollars and reloans every 2 weeks for a year, the amount they’ve loaned comes out to $15,600. With that they would have only paid $2,000 in fees which comes out to 12.8% of what they loaned. This is cheaper than most bank loans especially when you account for the fact that it DOES NOT accrue interest if you can’t pay for some reason it’s more beneficial to those struggling. Also if your check ever returns payday lenders are very understanding and work out payment arrangements for $20-$75 per pay period to avoid court. The only growth of the amount you owe is if your check returns and that is a one-time 31.14 cent check return fee.

Banks also generally ARE NOT approving the person for a loan and that’s why they’re coming to a payday lender. Every payday loan customer has a bank account so in general they’ve most likely tried every avenue beforehand. Although I’m not familiar with your specific credit card rates, mine tend to be higher, often in the range of 20% or more. In times of need, my family has found payday loans to be a helpful resource, especially when credit cards are maxed out during emergencies. Unlike most banks, which typically require a credit score of 630 or higher for loan approval (and leave a hard credit inquiry on your record if you’re not approved), payday loans use a soft credit inquiry and consider other factors when making lending decisions allowing them to help when others may turn them away.

Focusing on the APR when it comes to payday loans is ludicrous and deceptive because payday loans DO NOT accrue interest, they charge a one-time fee between 12.8%- 16% of the loaned amount. (MAX Loan $600; up to 2 Statewide)

Focusing on the APR when it comes to payday loans is ludicrous and deceptive because payday loans don’t accrue interest, they charge a one-time fee between 12.8%- 16% of the loaned amount. (MAX Loan $600; up to 2 Statewide)

An Example Of What Happened When Illinois Passed an Identical Bill

“Interest Rate Caps in Illinois: In March 2021, Illinois Governor J.B. Pritzker signed the Predatory Loan Prevention Act into law, capping interest rates at 36% for consumer loans, including payday and car title loans. This legislation was modeled after the federal Military Lending Act, which also protects active service members and their dependents by imposing a similar rate cap.

Prior to this law, payday loans in Illinois carried an average annual percentage rate (APR) of 297%, while auto title loans had APRs around 179%1. By implementing the 36% rate cap, Illinois joined 17 other states and Washington, D.C., which say they do so in attempt to provide substantial protections to low-income communities targeted by predatory lending practices.

Foreclosure Rates in Illinois: Unfortunately, despite the "positive" impact on consumer loans, Illinois faced a surge in foreclosures. With the forclosure moratorium ending later that year as well. In October 2021, about one in every 1,923 homes in Illinois was in foreclosure, representing an 182% increase from September and nearly triple the number from October 2019. Most of these foreclosures occurred in Chicago, where the unemployment rate was higher than the national average. 

In summary, while the interest rate cap has positively impacted consumer loans, Illinois still faces challenges in its housing market. The state’s efforts to strike a balance between protecting borrowers and maintaining access to credit remain a topic of ongoing debate.”

Payday Loans are an Essential Business

As a customer service provider within a payday loan company and as someone who grew up in a low-income household that has regularly utilized these services, I understand the importance of payday loans in our society. These loans provide crucial financial support for many families in Michigan, including my own. The proposed bill SB632 threatens the existence of such services, which could have devastating effects on those who rely on them.

Payday loans are often the only option for individuals who do not have access to traditional banking services or are living paycheck to paycheck. According to data from the Federal Deposit Insurance Corporation (FDIC), nearly 27% of households in America are underbanked or unbanked. This means they lack access to basic financial services that many take for granted. It also fails to take into account that some people just dont want to deal with banks.

If passed, SB632 will limit these already scarce resources further. This is not just about protecting an industry; it's about safeguarding a lifeline for countless families across Michigan.

We must raise awareness about this issue and contact our local representatives to voice our concerns against SB632. By doing so, we can protect payday loan services and ensure they remain available for those who need them most.

Please sign this petition and join us in standing up against SB632!

Say No to SB632 contact your local representative today and tell them to vote no on SB632!

Say No to SB632: Protect Access to Short-Term Lending

As Michiganders, we understand the importance of having access to emergency funds when traditional banks may not provide loans. Payday loans have been a lifeline for many of us, preventing car repossessions, power shutoffs, and home foreclosures. Let’s stand together and say no to SB632, which threatens to eliminate this crucial resource.

The Facts About Payday Loans: Debunking Misconceptions

1. Interest Rates and Fees: SB632 falsely claims that payday loans are predatory with exorbitant interest rates. However, payday loans don’t accrue interest like traditional bank loans. Instead, borrowers pay a one-time fee based on the loan amount (up to $600 per branch with a maximum fee of $77, limited to two loans statewide).

2. Payment Plans: Life can throw unexpected challenges our way. If someone can’t repay their payday loan, most lenders are willing to work out a payment plan. Unlike traditional loans, there are no additional interest charges or fees during this process so long as you stay in touch, explain your situation and make an attempt to pay something each payday. 

3. Protection Against Scams: Payday lenders serve as a safety net, protecting countless people from online scams. Without them, where would these vulnerable individuals turn? Unfortunately, alternative support systems are scarce when banks deny loan approvals.

4. Hidden Consequences: Passing SB632 could lead to unintended consequences. Desperate for funds, people might turn to online installment loans, paying back three times the borrowed amount over the long term. These loans often come with unmanageable monthly payments, pushing borrowers further into financial distress.

The Real Predators

The true threat lies with those pushing SB632. By eliminating payday lenders without providing a viable replacement, they jeopardize hundreds of thousands of Michiganders’ accesses to emergency funds. Moreover, Michigan’s economy and job market, just beginning to recover, would suffer needlessly.

Let’s protect what has worked for generations. Tell your representative to vote NO to SB632 and ensure that our fellow citizens have a safety net in times of need. 🌟💪

 
Feel free to share this message with your local representatives to advocate for responsible lending practices! 😊🗳️📜

References: 

https://247wallst.com/state/how-the-foreclosure-rate-in-illinois-compares-to-the-nation/

https://chicagoagentmagazine.com/2021/09/09/illinois-foreclosure-rates-august-2021/

https://www.consumerfinancemonitor.com/2021/03/25/illinois-predatory-loan-prevention-act-signed-into-law-and-now-effective/