   
Loan law keeps counselors busy 2004-05-24
Oklahoman
Editorial
A law that took effect last
September legalizing so-called "payday loans" has spawned nearly 400
companies that are flourishing. Now a bill seeks to clamp down a bit
on the industry in Oklahoma, and a recent report indicates the need
for some sort of review or tweaking.
With payday loans, lenders are allowed to make loans up to $500,
secured by personal check, with a minimum term of 13 days. The loans
carry finance charges that may equal an annual rate of more than 400
percent.
The law stipulates that people who take out more than five loans
in a three-month period must receive credit counseling. Once that's
done, they're given a certificate that allows them to take another
loan. If they don't have the certificate, they must wait until the
90-day period has expired.
A recent story in the Tulsa World noted that the Oklahoma City
office of the Consumer Credit Counseling Services, has stopped
issuing the certificates because it's been inundated. The agency's
president, John Cooper, said more than 9,000 requests for
certificates had been processed since October, with about 1,700
granted through February. And the number of requests was increasing
weekly.
Lenders say they're providing a service. Consumer advocates say
such companies thrive at the expense of low-income borrowers who
often wind up in a cycle of continuous borrowing.
Senate Bill 1565 would limit borrowers to one outstanding payday
loan and would impose a 24-hour waiting period between loans. As it
emerges from conference committee, the bill merits lawmakers'
attention. The measure wouldn't crimp the lenders all that much and
it could provide help for some borrowers.
| 
