Obama's plan to steer payday loan customers back to traditional banks for their small loans has not exactly taken off in the first year of the two-year pilot program.
Online PR News – 04-December-2009 – – President Obama's pledge to regulate the Payday Loan industry and create alternative small loan programs is not exactly taking off. The President's plan has been to encourage traditional banks to return to offering small loans to borrowers. The small loan is a product that the traditional banks have voluntairly shunned over the past decade or so because they were not able to offer the product without losing money. In short, traditional banks aren't set up to handle payday loan customers efficiently as online companies like www.x9a.biz.
The plan was to nudge payday loan customers back into banks where they could get quick and easy payday loans. The banks are more regulated and have much more reporting that's required. The industry could be more tightly controlled if more payday loan borrowers got their loans from traditional banks which have a complex, interwoven connection with the government, both Federal and State. As it stands now, the payday loan industry is a product of the free market and until now very loosely regulated. Obama and the FDIC offered their alternative bank-originated payday loans as a safer way to get fast, small loans. They are calling their program The Small Dollar Loan Pilot Program.
This pilot program does indeed offer a payday loan that comes with lower interest rates- under 36% APY. The fees are typically $10 per $100 borrowed, compared with $15 found at www.x9a.biz. The terms are longer than a pay cycle, and the origination fees are nothing or very little.
So why aren't payday loan customers flocking to the banks offering Obama's alternative? First of all, the banks are seeking a relationship with the borrower. The FDIC requires these lenders to set up a bank account and attend a financial literacy class. "You have to keep a certain amount of money in the savings account. The nonfinancial requirements really annoy the customer" says Mr. Schein, spokesman for an organizatio that represents the payday lenders. Nobody asks questions when you take out an online payday loan. You don't have to attend a class. You don't have to open a savings account and you don't have to put part of your payday loan into that savings account. You just fill out a two-minute application, take a quick phone call, then you get your money within one busines day. Who has time for a financial literacy class?
As always, www.X9a.biz is here with the most current news on the state of the payday loan. We offer excellent terms, friendly customer service, and an easy, fast online payday loan application. For news and more articles like this on the payday loan industry, visit our website at www.x9a.biz.