U.S. Air Force personnel confronting a sudden financial hardship will soon have access to a modest but quick interest-free loan, according to the Air Force.
The loan program is an Air Force Aid Society initiative that begins March 3 at Air Force installations worldwide.
Under the Falcon Loan program, an airman can apply for a loan of as much as $500.
A similar effort was launched last month by the Navy-Marine Corps Relief Society. It includes a cap of $300.
The Air Force loan program “will be helpful in diverting some airmen faced with financial emergencies away from high-interest payday lenders,” Gretchen Shannon of the U.S. Air Forces in Europe, Airman and Family Readiness Branch, said in a news release.
One of the primary features of this program, according to the Air Force, is the ease and speed with which an airman — or a spouse with power of attorney — can secure a loan. A person needs only to fill out a short application form, visit a family readiness center, and present their ID card and a current leave and earnings statement, according to the Air Force.
Loans must be paid back within 10 months, sooner if an airman is separating from the service during the load period.
“The streamlined application process for a Falcon Loan requires no budget information, backup documentation or first sergeant or commander approval,” the news release stated.
Ultimately, the hope is that a cash-strapped individual will avail themselves to the guidance and financial services available at family readiness centers.
Source:http://www.stripes.com/article.asp?section=104&article=52527
Payday loans cap supported
Influential allies of payday lending are turning against the industry, raising the stakes in the fight over legislation to clean up the high-cost, instantloan business.
A bipartisan group of House leaders yesterday proposed a 36 percent cap on interest rates, limiting loans to five per year and no more than one at a time, but allowing lenders to collect a 10 percent fee on loans, which are now restricted to no more than $500.
Supporters of House Bill 12 include Speaker William J. Howell, R-Stafford, and House Commerce and Labor Committee Chairman Terry G. Kilgore, R-Scott, both of whom last year sided with lenders in opposing a rate cap; also Del. Dwight Clinton Jones, D-Richmond, head of the Legislative Black Caucus, for which a clampdown on payday loans is a priority.
Later, Senate Republican Leader Thomas K. Norment Jr., R-James City, another friend of payday lenders, told the industry's lead lobbyist, Reginald N. Jones, that if a deal is not reached this year, "I could be convinced the best thing to do might be to abolish the industry."
Yesterday's developments indicated that, despite the millions of dollars lenders are spending on lobbying, contributions and advertising, lawmakers are wearying of an issue that is inflaming constituencies within both political parties and is seen by a growing number of local governments as destabilizing communities through mounting personal debt.
"We've got to get rid of the issue this year," said Sen. John S. Edwards, D-Roanoke, who last year backed industry-written safeguards. "There is either serious reform or just cap it."
The industry vowed to fight on, depicting the House plan as unfair to its customers in need of small loans and a death sentence to money stores whose profits would be sharply reduced. An executive of the industry's trade group, former South Carolina state Sen. Tommy Moore, complained that it had been shut out of talks on the House bill.
"In essence, legislators are painting consumers with a broad brush and attempting to create a financial product that will not work in the free market," Moore, a Democrat, said in a written statement.
Currently, lenders collect $15 on every $100, setting the initial cost of a $500 loan -- the maximum under Virginia law -- at $75. A 36 percent cap translates to about $1.40 per $100, not enough, the industry says, to keep cash stores in operation.
Though the state was opened to lenders in 2002, a backlash against the industry -- it is depicted as ensnaring the unsuspecting in debts that can take months or years to repay -- has left Virginia surrounded by jurisdictions that have banned lending or dramatically restricted it.
House Bill 12 is expected to emerge today from the Commerce and Labor Committee and could be on the House floor by Friday.
Supporters are predicting a hefty vote for the measure, perhaps weakening the resistance of the industry's top supporter in the Senate, Richard L. Saslaw, D-Fairfax, the majority leader and chairman of the Senate Commerce and Labor Committee.
source:http://www.inrich.com/cva/ric/news.apx.-content-articles-RTD-2008-02-05-0113.html
A bipartisan group of House leaders yesterday proposed a 36 percent cap on interest rates, limiting loans to five per year and no more than one at a time, but allowing lenders to collect a 10 percent fee on loans, which are now restricted to no more than $500.
Supporters of House Bill 12 include Speaker William J. Howell, R-Stafford, and House Commerce and Labor Committee Chairman Terry G. Kilgore, R-Scott, both of whom last year sided with lenders in opposing a rate cap; also Del. Dwight Clinton Jones, D-Richmond, head of the Legislative Black Caucus, for which a clampdown on payday loans is a priority.
Later, Senate Republican Leader Thomas K. Norment Jr., R-James City, another friend of payday lenders, told the industry's lead lobbyist, Reginald N. Jones, that if a deal is not reached this year, "I could be convinced the best thing to do might be to abolish the industry."
Yesterday's developments indicated that, despite the millions of dollars lenders are spending on lobbying, contributions and advertising, lawmakers are wearying of an issue that is inflaming constituencies within both political parties and is seen by a growing number of local governments as destabilizing communities through mounting personal debt.
"We've got to get rid of the issue this year," said Sen. John S. Edwards, D-Roanoke, who last year backed industry-written safeguards. "There is either serious reform or just cap it."
The industry vowed to fight on, depicting the House plan as unfair to its customers in need of small loans and a death sentence to money stores whose profits would be sharply reduced. An executive of the industry's trade group, former South Carolina state Sen. Tommy Moore, complained that it had been shut out of talks on the House bill.
"In essence, legislators are painting consumers with a broad brush and attempting to create a financial product that will not work in the free market," Moore, a Democrat, said in a written statement.
Currently, lenders collect $15 on every $100, setting the initial cost of a $500 loan -- the maximum under Virginia law -- at $75. A 36 percent cap translates to about $1.40 per $100, not enough, the industry says, to keep cash stores in operation.
Though the state was opened to lenders in 2002, a backlash against the industry -- it is depicted as ensnaring the unsuspecting in debts that can take months or years to repay -- has left Virginia surrounded by jurisdictions that have banned lending or dramatically restricted it.
House Bill 12 is expected to emerge today from the Commerce and Labor Committee and could be on the House floor by Friday.
Supporters are predicting a hefty vote for the measure, perhaps weakening the resistance of the industry's top supporter in the Senate, Richard L. Saslaw, D-Fairfax, the majority leader and chairman of the Senate Commerce and Labor Committee.
source:http://www.inrich.com/cva/ric/news.apx.-content-articles-RTD-2008-02-05-0113.html
Payday lenders question proposed limits
An effort by the Kentucky Youth Advocates to tighten regulations that apply to payday loan companies could face opposition from the industry.
Irene Spargrove, public relations specialist for Checksmart Financial, which operates payday advance stores in 10 states including Kentucky, said payday loans are less expensive than overdraft or late fees.
"Consumers have chosen to go with a payday advance over not paying their bills," she said.
She said some of the suggested proposals could limit their decision-making power and, depending on how the legislation is worded, might push payday advance companies out of business altogether.
The Kentucky Youth Advocates released a report this week urging the state legislature to pass legislation that:
• Extends the minimum terms, giving borrowers more time to pay back their loans. The minimum now is 14 days.
• Lowers the cap on fees.
• Limits consumers' ability to pay a loan off in cash and then immediately take out another payday loan.
• Creates a database to track payday loans and ensure that people are not circumventing laws by borrowing more than is allowed.
Extending the minimum term to more than 14 days would create "an entirely different product," said Lyndsey Medsker, spokeswoman for the Community Financial Services Association of America, which represents the payday advance industry.
"A payday loan is a two-week loan," she said. "People use payday loans as a bridge to their next paycheck."
In some states, she said, efforts have been made to limit fees to an annual rate of 36 percent, which Medsker and Spargrove said would translate to a $1.38 fee per $100 loan.
"That legislation would push payday lending out of the state," Spargrove said, because lenders could not afford it.
She also said a database such as the one suggested by the Kentucky Youth Advocates might make customers uncomfortable.
"These consumers are adults," she said. "It is their decision to make."
According to an estimate by the Center for Responsible Lending, a typical payday loan borrower would end up paying back an average of $793 for a $325 loan. But Spargrove takes issue with that.
"That's just not the case at all," she said.
Jamie Fulmer, spokesman for Advance America, which operates 42 Kentucky locations, said more than 90 percent repay their loans within the two-week period.
If they can't, they can get an extension at no additional charge if the company is a member of the Community Financial Services Association, Medsker said. The association would like to make that a legal requirement for all payday loan companies, she said.
It is difficult to assess the Kentucky legislation because it has not yet been filed, she said.
source:http://www.kentucky.com/101/story/309704.html
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