Payday Lenders Cash in on Marines

[USMCRET6391]

by Cpl. Giovanni Lobello
Marine Corps News
February 25, 2005

MARINE CORPS AIR STATION YUMA, Ariz. - The inspector general of the Marine Corps sent out a memorandum in January explaining the problem payday lenders, or deferred presentment firms, are causing among Marines.
Maj. Gen. David F. Bice explained how Marines can fall into a downward spiral of debt because payday lenders charge triple-digit interest rates and threaten prosecution through the Uniform Code of Military Justice if payments are late.

The station tax center conducted a survey in January of Marines who had their taxes done, to help determine how often station Marines use payday lenders. Of the 297 surveyed, mostly single service members who ranked from junior enlisted Marines to commissioned officers, 79 have used payday lenders.

"The only reason I used the payday lenders was because of unexpected expenses I experienced," said Lance Cpl. Tabatha Ocasio, supply clerk, Marine Air Control Squadron-1. "I borrowed $200. After paying their fees, the total came out to $230. The amount of interest payday lenders charge is crazy. I would never use one of those companies again."

In the past six months, seven new businesses have opened in Yuma County.

According to the New York Times, payday lenders have opened a disproportionate number of outlets on the edge of military bases in the 37 states that allow them.

A recent analysis by the New York Times estimated that 26 percent of military households have done business with high-cost instant lenders.

California recently passed a bill concerning payday lenders, placing several restrictions and regulations on the companies in order to control them. Arizona is also working on several legislatures that will force payday lenders to follow specific guidelines.
Included in those guidelines are several restrictions for payday lenders if they lend money to a service member or spouse of a service member.

Deferred presentment companies may not conduct collection activity against a military borrower or their spouse while the service member is in a combat zone. Lenders also cannot contact the commanding officer or anyone else in the borrower's chain of command in order to collect on a loan made to a service member.

Payday lenders will also not be allowed to make a loan to a service member if a military base commander has declared a specific business off-limits to military personnel.
They will also be responsible for ensuring a notice in English and Spanish is provided, explaining the provisions borrowers are expected to follow.
One of the provisions is that no customer may have more than one deferred presentment service agreement at one time.

The provisions also require that any previous deferred presentment service must have been closed for at least 72 hours before a new agreement may be initiated.

Also, before payday lenders enter a written agreement with a borrower, they must ask every customer who seeks their services if they have any outstanding loans payable to another lending firm. Lenders will also have the customer sign a statement acknowledging that the licensee informed the customer of the restriction.

It is very easy for service members looking for a loan to get approved from these companies. Marines only have to show two bank statements, two leave and earning statements, a voided check and a form of identification.

The average fee for this service in the Yuma area is $15 per $100 borrowed. If a Marine borrowed $100, he would write a pre-dated check for $115 and receive his loan. When two weeks pass and another payday occurs, the Marine is obligated to bring in the $115 in cash or the lender will present his check to the bank for payment.

If the Marine makes the payment on time, $15 are lost in the transaction. For those who can't afford to pay it all, the lender would allow them to pay only the fee. Then in another two weeks, the borrower would still have to pay $115. If this continued for a whole year, the interest on the loan would equate to an annual percentage rate of more than 390 percent.
To help prevent the use of payday lenders, Marines in need of financial advice can contact the Navy and Marine Corps Relief Society here.

NMCRS offers interest-free loans to service members for emergency travel expenses and other unexpected needs such as car repairs.

"When it comes down to real needs, if (service members) would come here, they could get a loan interest-free," said NMCRS Caseworker Jack Weidner. "Now, if it's a want, that's something different. But if it's a need, they can get it interest-free and they won't have to worry about (paying back) some outrageous person that should be in jail."

[USMC0861]

Yeah they are blood suckers. My question is. Where have all the barracks loan sharks errr I mean freelance Bankers gone. Their rates weren't that bad.

[0311Marine]

Its a trap that boots seem to fall into, (yes I got caught in it) Get some fast cash from one of those bastards, then next pay period your pay is almost nothing because the check you wrote last week came out, so what do you do......do it again, and again and again. If anyone is thinking of joining the Military some of the best advice you can get is, STAY AWAY FROM THESE PLACES, save your money.

[SpongeJuan]

So where would I go if I wanted to get a loan? What would be the best way to find one?