Payday loans profitable at the expense of enlisted soldiers

The .payday loan business has exploded throughout the United States in recent years, probably due to the faltering economy. Many working class people who just can make ends meet resort to the easy to obtain, high-interest loans readily available most anywhere. These loans easily qualify as predatory lending, with interest rates that can easily top 500% per year. The loans are often made in amounts of several hundred dollars, are due in two weeks’ time and include fees that typically run $15-20 per hundred dollars borrowed. If the borrower finds themselves unable to pay after two weeks, the loan can be “rolled over” with the fee again added to the amount due. Quite often, borrowers find themselves owing more in fees than the amount of the initial loan.

Making matters worse is the proliferation of such stores in neighborhoods surrounding military bases. Enlisted military personnel aren’t well paid and are often young and financially irresponsible. The Department of Defense has listed predatory lending as one of the greatest problems affecting our soldiers. These stores prey on our soldiers during a time of war and several members of congress, including Elizabeth Dole, R-NC, are doing something about it.  Senator Dole’s proposed legislation would, among other things, limit the interest rate charged on loans to active military personnel to 36% per year. In the world of traditional finance, even this figure would seem outrageous. After all, most credit cards charge lower interest rates than that, even for cash advances. 

In the current version of the legislation, proposed as an amendment to a defense bill, the interest rate cap has been mysteriously dropped. This isn’t really a surprise; a similar proposal suggested for the recently passed bankruptcy bill also failed to pass. It’s hard to conceive of anyone who thinks that a 36% interest rate on loans isn’t enough, but apparently there are those in Congress who feel that 500% per year is reasonable. We don’t agree.

The amendment is not suggesting that the Pentagon do a study of the problem and report on the magnitude of the problem along with proposed suggestions as to how the problem can be either solved or minimized.

While the payday lending industry has denied targeting soldiers or any particular group of people, it’s pretty apparent to anyone passing through a town with a military base that they are doing just that. Several states, including North Carolina and Arizona, have noted that there are large concentrations of these cash advance loan stores in areas with military bases. 

Our soldiers have enough to worry about in a time of war. They don’t need predatory lenders taking advantage of them or their financial misfortune. And the last thing our soldiers need is members of Congress turning their backs on them.

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