Benefits, consequences associated with payday loans
10 p.m. Friday, June 9, 2006
Payday loan stores are popping up all over Kansas. There's been a recent growth surge in the industry, which leads to a surge in debt for Kansans.
“We see people almost everyday that are in trouble with payday loans,” said Marcia Collins, Consumer Credit Counselor.
That's because the loans have high interest rates, which makes it tough, sometimes impossible, for borrowers to fully replay the loan when it's due.
“Once you begin to use the payday loan then you're on a downward spiral,” Collins said.
Those who work in the payday loan industry said they are most often used by people with legitimate emergencies, like needed medicine for a sick child or necessary car repairs.
“I think it's the lesser of two evils for most people,” said Dennis Stein, Pawn Marketing, Inc.
Stein, who runs a pawn shop that also offers payday loans, said the only alternative for many people is to write a bad check and then face an even more severe penalty from their bank.
“I've looked at bank statements where they've had four or five over draft checks maybe for $20 to $70 that the bank's charging them $30 per check on,” Stein said.
And if regulations make it too difficult for payday loaners to operate, he believes people may turn to the internet, where it's easy to find a site that offers the service.
But over at Consumer Credit, the counselors hold out hope that people will educate themselves on the perils of payday loans and have a back up plan for those last minute money emergencies.
Wichita advocate group Sunflower Community Action hosted Friday’s conference, where politicians, residents and city leaders met to discuss the issue and possible future regulations.
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