Credit Union CEO Defends Payday Loan Program

[hrguy]

 

Rhonda Hotard, CEO of the 25,000-member, $174 million Louisiana Federal Credit Union in the small, primarily industrial community of LaPlace near New Orleans, sharply disputes the allegations made by the National Consumer Law Center and the Center for Responsible Lending in a joint May 16 letter to the NCUA.

Hotard agreed that the credit union makes the short-term loans to its members, but she pointed out that the credit union does so for 15% interest and not the 145% that the letter alleged.

NCLC and CRL arrived at that figure by including the $15 application fee that LFCU charges for the loans as part of the interest rate for the notes, a practice that Hotard acknowledged as unfair to consumers.

http://www.cutimes.com/2013/05/22/credit-union-ceo-defends-payday-loan-program?eNL=51520a1b140ba0ed7800006c&utm_source=Daily&utm_medium=eNL&utm_campaign=CUT_eNLs&_LID=137763512

[cv91915]

Since when is charging a reasonable fee for a service that someone is willing to buy "unfair"?

 

There's a huge difference between a $15 application fee and 145% interest. Someone with limited financial sophistication may have a difficult time understanding what a high interest rate will mean over time, especially when they see those "affordable" payments, however I don't know too many people that don't know the value of $15... and 15% interest for a high-risk loan seems pretty reasonable to me. I've read plenty of posts here from people who have car loans with rates worse than that, and those are secured by property.

[luckydriver]

PA has their own version of payday loans..doesnt look too bad to me

 

http://www.patreasury.gov/betterchoice.html

 

Unlike payday or cash advance loans, a Credit Union Better Choice Loan offers a longer, 90-day repayment term with lower fees and interest rates. In fact, you’ll never pay more than $20 for your application fee. And, you’ll pay only 18% APR—that’s considerably less than the 500% effective interest rates you may be paying on a payday loan. Plus, you’ll have the flexibility of making monthly, bi-weekly, or weekly loan payments

[hrguy]

PA has their own version of payday loans..doesnt look too bad to me

 

http://www.patreasury.gov/betterchoice.html

 

Unlike payday or cash advance loans, a Credit Union Better Choice Loan offers a longer, 90-day repayment term with lower fees and interest rates. In fact, you’ll never pay more than $20 for your application fee. And, you’ll pay only 18% APR—that’s considerably less than the 500% effective interest rates you may be paying on a payday loan. Plus, you’ll have the flexibility of making monthly, bi-weekly, or weekly loan payments

That's interesting