October 16, 2006
A new study about payday loans claims some big lenders have found a new way to evade the law.
The study looked at the two lenders who most often take borrowers to court for not paying back their loans.
claims that companies like Americash Loans and The Cash Store have
developed loans that circumvent the 2005 law that put stricter
conditions on short-term lenders.
Marva Williams is senior vice president of the Woodstock Institute, a non-profit that promotes economic development.
lenders now actively dissuade customers from taking out payday loans
that are covered by the act, in favor of more lucrative installment
loans," she says.
The study says these longer-term installment loans carry an average annual percentage rate of 387 percent.
The two lending companies did not return phone calls Monday.
A coalition made up of religious leaders, consumer advocates and public interest groups commissioned the report.