In Colorado, colorado, lenient legislation has created the perfect breeding ground for payday operators; there is a payday loan lender at every corner in every low income neighborhoods through out the state. The venders are some many that they now out number fast food joints. The last seven years have witnessed remarkable growth in payday lenders, in 2000 there were 212 throughout the state, currently there are over 650. In Colorado, rollovers are permitted and there are no laws to limit the interest rates imposed on payday customers. The state’s General Assembly has attempted several times to regulate the industry but has failed on all occasions. The failure put legislation to check the lenders is that those opting for fast cash have no where else to, therefore regulating the industry would put them financial jeopardy. The number of those families that currently use cash advances is growing with no alternative in the offing.

A disturbing new trend has emerged in the recent past. Many young adults in their twenties with well paying jobs have been trouping to payday loan shops for the most “trivial” of reasons. Wedding, birthday and baby gifts were the main reasons according to a recent survey driving them to payday lenders. What is surprising is the need to borrow was more to please their friends than to benefit themselves. Many of those borrowed only understood that they were charged interest for only two but didn’t understand that those loans carried interests as high as 500% per year, many of them admitted that they would use the service if they encountered any financial difficulties.

A new study by Policy Matters Ohio, a non-profit consumer law group, blames stagnant salaries for the growth in payday loans. According to the study about 60% of Ohio’s ohio, working population has not had a significant raise in 20 years. The report released on September 1st indicated that the typical Ohio punter is making just about the same as they did eighteen years ago, while inflation has progressively risen. The stagnant salaries have been blamed on the growth of payday loans and have impacted negatively on low income families who have borne the brunt of inflation.

The story for the high income families is not the same; they have grown richer over the same period. The inequalities in income growth in Ohio has lead to the growth of sub-prime lending this has not gone unnoticed; there are plans by the legislature at Columbus to pass legislation to control the industry particularly payday lenders.

Missouri senate Missouri, has been debating to limit the scale of the payday lending. The developments have made headlines country wide. The Cash advance industry has taken advantage of loop holes in the existing laws. Municipalities in various cities and towns have imposed their own laws to control the payday lenders. Missouri state Attorney General, Jay Nixon recently wrote an article in a leading Kansas City daily hailing the recent attempts to put curbs on the industry which he believes has done more harm than good for the low income families in the state through the predatory lending practice by payday lenders. The present laws allow lenders to charge as much 1,900% annually, last year the industry lent out over $3 million with the average interest per loan at over 400%. The state division of finance licensed over 1,550 payday licenses last year.

The payday loans industry has experienced explosive growth in the last 10 years throughout the country. In some states there are more payday loans stores than there are fast food joints, most of the growth has been concentrated in low income neighborhoods where majority of the residents live from pay check to pay check.

The growth has not gone unnoticed, consumer advocacy groups have been up in arms against the industry players, and they have been campaigning to have caps put on the interest rates charged on the loans. Legislators in many states have heeded the call and have passed laws to cap the interest, in some states the most a lender can charge is 36%. The consumer groups are not satisfied with that, they want the industry to be heavily regulated to protect the customers from predatory lending. They want the lenders to limit the number of roll over’s per loan and also allow the borrower to negotiate at no extra cost, on a payment plan if they are unable to repay the loan.

For a long term now FICO has been the industry standard method of generating a credit score, it was formulated by the Fair Isaac Corp fairissacs. The Fair Isaac Corp have come up with another credit scoring system, The FICO Expansion score, it takes into account alternative financial transactions like rental history, payday loans, and utility payments to generate a credit score.

The FICO Expansion score can give a fairly accurate credit score for people who may not have credit cards and mortgages etc. The FICO Expansion score would be very beneficial to the working poor, as would take into account all their financial transactions some of which may not be considered by traditional banks. Those with poor credit scores due to past financial misdeeds may not benefit much from the new rating system.

Fairview, Missouri, missouri, joined the list of cities that have put a stop to fax less payday loans with it boarders. The City Council voted for a zoning order to the limit the number of payday lenders permitted to operate in Fairview. The plan to limit the lenders begun on August 10th, Fairview will permit only two payday lenders within the city, currently there are several lenders in Fairview. The order was the brain child of Tim Tolliver, the city's director of Land Use and Development; he aimed to put a stop to the predatory lending in the city. Anyone intending to run a payday lending business will have to now undergo a back ground check before being granted a license.

The City Council of Fairview did not relieve how it intends to implement the new law.

Fast cash advance is big business in Missouri; the growth has been blamed on weak state legislation. Fairview is not the first to act on payday lenders, other cities to have taken the same measure include Blue Springs and Lenexa. The anti payday lenders legislation started when Kansas City first reviewed the issue in its own city council.

The Department of Defense DOD, issued the final draft of its rules governing the use of cash advance or payday loans by its personnel, the new rules were issued on 31st August and are expected to be enacted with six months. In October last year congress took its first step towards regulating the payday industry by ceiling the interest charged at 36%, the defense Department rules aimed to define exactly what type of loan would be classified as a payday loan or cash advance. Rent-to-Own stores were however exempt from the definition even though they operated in similar manner to payday lenders, while some RTO’s offered payday loans as well. RTO and payday loan customers are one and the same they fall under the sub-prime category. Like payday loans RTO transactions also attract very high interest and can grow exponential if they are not serviced. Critics of the new rules are not satisfied, they believe that they leave too many loop holes for payday lenders to exploit.

Emily Bihn of Albuquerque, New Mexico, AlbuquerqueNewMexico and a group of demonstrators marched to their local payday lender to demonstrate against the high interests they had been charged. They organized the demonstration after they realized that the loans they had taken were predatory. Payday loans carry interest as high as 450% per year. Majority of those who can afford to pay such rates do not need or use such loans. Many reports have cited that payday loans are targeted at poor people who eventually end up in debt and erode any savings they may have had. Emily Bihn had been one such customer but over time she came to grips with her finances. She realized that the only way out of debt is by taking steps to improve ones financial situation. She managed to obtain a mortgage to buy a house which freed up some extra income to pay off the payday lenders. Unfortunately most users of payday loans are unable to obtain credit to buy homes, such people do have away out, they can budget the little income they have so they are able to put aside a little money each month to cater for unforeseen expenses.

A report released by Personal Cash Advance indicates that people opting for payday loans are getting older. The report illustrates that thirty percent of those interviewed were forty five years of age or older, the findings are in line with those of The Community Financial Services Association of America, (the umbrella organization for payday lenders) report which put the figure at thirty two percent of borrowers in the same age group. The Personal Cash Advance report also showed that people above 65 years were less likely to use payday loans, they accounted for 4% of those surveyed.

Personal Cash Advance attributed the rise to higher awareness of payday loans in this age group particularly through online advertising. Personal Cash Advance also pointed out that people in this group were confident that the personal information they gave online was not used in any other way other then what the lender had indicated. The trend will continue and more and more people in this category will use payday loans along side other financial products available in the market.

A district judge in Albuquerque, New Mexico, AlbuquerqueNewMexico restrained the Governor and the Attorney general from implementing orders that would have put limits on interest rates charged by payday lenders. The bill been tabled in the state legislature but it had failed to pass, the Governor and the Attorney general wanted to use their administrative powers to limit the interest rates. The district judge found that the Governor and the Attorney general had over reached their powers when they issued the order and the judge directed that the matter could only be handled by the legislature. Payday lenders were thrilled with the ruling however consumer advocacy groups felt that lenders in other states follow the same ruling and couldn’t understand why the same could not be followed in New Mexico as well.

Pima County in Tucson Arizona,TusconArizona has found a novel way to combat and control predatory lending. The "Don't Borrow Trouble" hot line, aims to direct Tucsonans away from predatory lenders and assist those who have already borrowed from such lenders. Residents are advised to call the hotline whenever they think of borrowing from companies that advertise through the mail. The hot line is manned during regular business hours from Monday through Friday, but callers can leave their names and numbers whenever they call during weekends and off hours. The hotline is funded by the city of Tucson, the county, the Pima County Industrial Development Authority and Freddie Mac, among others. Don't Borrow Trouble hotline is a referral and educational service. Callers are directed to nonprofit organizations which advise families on how to steer clear of or resolve their financial difficulties. The nonprofit organizations recommend financial institutions that offer loans with reasonable interest rates.

A MariSol branch in Tucson, Arizona,TusconArizonahas opened its doors to people who borrow from payday lenders. They plan to offer loans in the same way as payday lenders do but they will charge 18% interest. The move came about after a local non profit organization realized that people use payday lenders in spite of the high interest rates because they have no other alternatives available to them. They intend to offer better interest rates to people with better credit; this they hope will encourage those who borrow from payday lenders to clean up their credit rating. An applicant’s credit score will not be used to determine if they can borrow from but will only determine the rate at which they will borrow at. MariSol plans to popularize the service but distributing life lets in both English and Spanish.

People view payday lenders in two ways; you either like them or hate them. Those who are opposed to them believe that they are only out to take advantage of low-income families. They argue that the high interest rates charged on the loans are meant to keep the borrower in debt. Consumer advocacy groups such as Arkansans Against Abusive Payday Lending (A.A.A.P.L.) are pushing for legislation, at the state and federal level to regulate payday lenders. They want the laws to put a ceiling on the interest rate a lender can charge as well as allowing borrowers to negotiate for better payment plans once they are unable to pay back the loans. Players in the industry are fighting back they launched a media campaign to educate and to cultivate a better image. Lenders believe that they perform a vital service to the community; the payday industry is worth $ 40 billion a year.

Kansas City has been experiencing tremendous shift in the payday loan industry. For years payday lenders have concentrated on the low-income neighborhoods, but recently there has been a shift in the pattern. They have begun setting up shop in the suburbs, the residents are not pleased with the move- particularly in the overland park area, and they believe that the emergence of such lenders will devalue the area. The lenders think otherwise, they believe that theirs is a legitimate business providing a much need service to the community. The shift in location is not limited to Kansas only, according to the Brooking institution Washington, D.C., there are more payday lenders mid-range income neighbor hoods then in lower income neighborhoods. Experts attribute the trend to changing lifestyles; the overall debt level has increased leaving many middle-income families with no other source of credit.

The Internet has changed the way we conduct our daily affairs, from being able to book for your flights to ordering your groceries from the comfort of your own home. Now you can get short-term loans from the comfort of your home or office. Payday lenders are now online; you can apply for a short-term loan and have it approved within minutes. Payday lenders offer loans to tide you over till your next payday all one requires is a checking account and proof of income. The Internet has eliminated the need to go down to your local payday lender and fill out application; once your loan has been approved the money is then deposited directly into your account. It’s quick and convenient; there is no need to fax your documents to the lender. On the day the loan falls due your bank will simply debit the money from your account including the lenders fees.

Payday lenders are increasingly targeting members of the armed forces; Reports coming in indicate that there is a large number of military personnel have payday loans. The widespread indebt-ness is a major cause for concern for the military, it easily open doors to espionage and can compromise security clearance. The majority of those who take payday loans are young service man and retired personnel, this group is particularly vulnerable to payday lenders, most have either no credit or they are overstretched leaving them with no other alternative but to turn to payday lenders as their only source of credit. Financial capriciousness can lead to dismissal from the forces, to protect servicemen from unscrupulous payday lenders the pentagon is pushing legislators to impose a limit 36% interest rate for payday loans taken by military personnel across the country.

In March of 2007, legislators in New Mexico passed a bill aimed at regulating the payday industry in the state. Lt. Gov. Diane Denish worked tirelessly to have the bill passed; she believes that the bill will protect low-income households from high interest rates without having to take away short-term credit options from them. Unfortunately the bill doesn’t allow for rollovers, but puts a ceiling on interest rates at $ 15.50 for every $100 borrowed and allows borrowers to take loans for 14 to 35 day periods. The bill does offer a reprieve to those who have difficulty paying back their loans, it allows for a 125 day payment plan with no fees or interest charged, however once the loan is repaid the borrower has to wait for 12 days before the can opt for another payday loan. Thirty-seven legislators voted for the bill and five were against it, those opposed to it want the fees charged by lenders to be increased and the payment period shortened.

Consumer Advocacy groups have their guns trained on payday lenders. To most of these groups payday lenders are out to take advantage of poor people, the interests charged, in some cases as high as $ 35 for every $100 borrowed, are meant to keep the borrower in debt since most of them carry a lot of debt so they are unable to clear the payday loan on time resulting in extra charges. The advocacy groups are pushing for laws to control the industry. They want the interest rates to be reduced and controlled as well as allow the borrower to negotiate for a repayment plan if they are unable to pay the loan at no extra charge. Payday lenders are being attacked from all fronts the consumer groups want laws to be tightened to punish lenders who take advantage of customers by not disclosing all information about the loan to the customer. Some payday lenders are happy about the proposed laws, they view them as the way forward for the industry, and they believe that the laws will weed out the bad elements and give the industry the much needed legitimacy and credibility that is currently lacking.

Tele track is increasingly being used by payday loan venders to weed out bad customers. Tele track works by using a customer’s social security number. The vender usually looks for customers who may have NSF charges on their accounts as well as verify if the customer is operating the account on which the check is drawn. A customer with multiple tele track enquiries on their accounts and multiple NSF charges usually indicates that they may be servicing several Payday loans. There are venders who do not use tele track, they however charge higher interest rates then those who do, and this is as a result of the high risk nature of the client. Many customers prefer to use venders who do not use tele track as this ensures some privacy in the transaction.

Every time a payday loan check is not honored, your bank will charge you NSF fees to avoid such fees you can request your bank in writing not to pay the check, by doing so you will not have terminated the contract between you and the lender. Stop payment orders usually last for six months after which the check can be presented again for payment. In order to put in place such an order banks require the check number, the date of issue and the name of the person the check is written to as well as the amount. The bank will charge you a fee for the service. In some states it is not legal to stop a payday loan check, so please check with the relevant authorities before place such an order.

A typical payday loan ranges from $500 to $ 1,500 and is usually extended for a two week period. Payday lenders prefer to look at themselves as providers of short term financing but in reality they design their loans in a way that will keep the borrower in debt for a long period of time. Payday lenders can be classified under predatory lenders, unlike loans offered by creditable financial institutions, payday loans are offered for a short period of time and at very high interests, in some cases as high as $30 for every $100 borrowed. They allow the borrowers to rollover their loans, for a fee, if the borrower is unable to pay the entire amount on the due thus plunging the borrower into a cycle of debt. Payday loan contracts have an arbitration clause which denies the borrower the right to sue the lender on any matter covered in the contract.

On the 18th of September, 2007 the Washington D.C. city council will meet to discus and maybe pass the "Payday Lending Consumer Protection Act of 2007" (B17-132). The proposed act if passed, no payday lender will charge more then 24% APR that works to 92 cents for every hundred dollars lent. Washington D.C. payday lenders have launched a media campaign against the act and are proposing that the city council reconsiders the cap on interest rates as well as other proposal such as;

* Stiffer punishment for lenders who do not follow the relevant law.
* Full disclosure of all charges related to payday loans offered to the customers.
* Mandatory verification of the customer’s ability to repay the loans.
* Funding of payday literacy programs.
* Allow only one roll over and offer extended repayment plans if the customer is unable to repay on the due date.