Payday Lending
Payday loans (also called paycheck advances or a payday advances) are short-term, high-cost loans, usually up to $500. The loans are made to cash-strapped borrowers with the anticipation that they will be paid back on the borrower’s payday. Typical fees for borrowing $100 range from $15 - $35. (A $15 fee on a $100 two-week loan results in an annual percentage rate of 390%.) When borrowers don’t have the cash come payday, the loan gets flipped into a new loan, piling on more fees into a spiral of debt for the borrower.
New York State has a 25% interest rate cap (usury law) on small loans so payday lending is illegal in New York. For this reason, New York does not have the store fronts selling payday loans that exist in other states. Lenders are increasingly making illegal payday loans to New Yorkers, however, through the internet and toll free telephone numbers.
Do Payday Lenders Target Minorities?
Donald P. Morgan and Kevin J. Pan of Liberty Street Economics examine whether payday lenders target black and Hispanic households. Read More
Hurting Poor Borrowers (New York Times)
New York has some of the strongest anti-usury laws in the nation. But that could change if a deeply flawed bill pending in the State Legislature goes forward. The bill would allow check-cashing businesses, which are common in impoverished areas, to charge higher interest rates and to enter the lending business. Read More
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Consumer Advocates Praise FDIC Settlement to End RALs from Republic Bank & Trust
Advocates at the Community Reinvestment Association of North Carolina (CRANC), the Consumer Federation of America (CFA), and the National Consumer Law Center (NCLC) applauded the FDIC's settlement with Republic Bank & Trust which requires the bank to terminate its refund anticipation loan (RAL) program after the end of the next tax season. Read More
Albany Bill Would Let Check-Cashers Provide Loans
The Senate and Assembly banking committees have both approved a bill to permit check-cashing outlets to provide short-term loans. Backers say it offers financing to those whom regular banks don't serve. Critics say it would permit exploitative “payday” lending. Read More
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Memorandum in Opposition: New Yorkers Do Not Need Check Cashers as Lenders in New York
Empire Justice Center strongly opposes A.7047/S.3841, referred to as the “short-term financial services loan act.” We believe the bill would create an unlevel playing field by allowing check cashers to make loans that are currently prohibited from being made by mainstream, regulated banks and credit unions. Read More
Testimony of Empire Justice Client at Assembly Minimum Wage Hearing in Buffalo
My name is Tammy Bove. I went to Empire Justice for help with legal problems I was facing at my job. And today I’m here to share with you some of the hardship I faced in working at a minimum wage job. Read More
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RESOURCES
For more information about the hazards of payday lending go to Center for Responsible Lending, Consumer Federal of America or National Consumer Law Center.
