Options for Payday Borrowers
El Paso — The city council ordinance passed yesterday and sponsored by Representative Susie Byrd, will prevent a person from borrowing more than 20 percent of their gross monthly income when they go for a payday loan or auto title loan. That's supposed to help borrowers by keeping some of them out of trouble..Money that's borrowed and not promptly repaid can mean huge interest penalties. And starting July 1, instead of allowing loans to pile up huge fees for many months...the new ordinance says a loan must be paid back in four payments, each payment retiring at least 25 percent of the loan's principle, not just the growing interest. You may want to join a credit union or ask your existing one about their policy on cash loans. You're likely to get a better rate there..And if your bank direct deposits your employee paycheck, it might for a smaller fee front you the money then deduct that amount when your next paycheck comes in.
Byrd tells us, "Unfortunately they're not as good at marketing those products as the payday lender,s and when you see a payday lender on every block, see a guy holding up a sign that says 'quick cash', they're much more visible. We need to get the mainstream lenders who have more affordable products, to become better at marketing those products."
Borrowing money is never free of course. A bank that's willing to loan short term cash or give you an advance on a direct deposit paycheck will charge a fee for the service, just not the 20-23 percent interest charged by some of the storefront business that specialize in payday and auto title loans.