National Payday Loan Blog

Curently in the Lead:

Lobbyist Influence Casts Shadow over CFPB Rule Changes

12632779575_ebb9965e76_oThere is always criticism of the lobby system in Washington, where lawmakers are routinely courted by lobbyists (who represent big businesses and trade associations) to try and influence policy. Critics say this unfairly distorts the democratic system.

Reports coming out today indicate that big businesses aren’t the only groups trying to shape policy from behind the scenes.

The Consumer Finance Protection Bureau (CFPB) made headlines earlier this year with their campaign to shut down the payday loan industry. They proposed a new set of rules that would supposedly “overhaul” the payday lending system, but in actuality would ensure all independent lenders were put out of business.

But the CFPB was being influenced by outside sources, it would seem. A consumer advocacy group called the Center for Responsible Lending had considerable influence over the law changes – they met with Obama administration officials multiples times, as well as exchanging policy drafts and emails throughout the process.

Payday loans are short term, higher-interest loans catering to the working class citizens with poor credit who banks will not work with. Although they provide a valuable service to a segment of the populace who are underserved by the big banks, they have long been a target of consumer groups (who are oft times funded by the banks themselves)

The Center for Responsible Lending has long been overly critical of independent and payday lenders, and now it seems they were given a national stage to put their opinions into practice and potentially influence the finances of tens of millions of people.

15828702029_0847078a7a_zTo make things worse, at the same time they were pushing to shape national policy, the Center for Responsible Lending was also pushing its own agenda – it wanted the CFPB and the Obama administration to support its own small-loan business. It is called the Self Help Credit Union, and the CRL wants to promote its own business as it is concurrently putting all its potential competition out of business.

Criminal? Immoral? Illegal? That’s hard to say with the facts at hand.

But does it seem shady? You bet it does.

The problem most people have with lobbyists is that it appears that they curry favor and influence lawmaking by throwing their money around. Lobbyists are seen as representatives of Big Business and the 1% upper class, who have an unfair advantage over working class Americans, and use their position and power to extend that advantage as much as possible. Whether this right or wrong, it is the general perception.

So when the same tactics are used by a so-called “consumer advocacy group” it raises the same red flags as any other lobbyist trying to use the law to gain a competitive advantage for themselves.

The CFPB is still planning to move ahead with its overhaul of payday lending rules, but these reports have opened the eyes of some politicians. Lawmakers from Florida, among other states, are fighting the federal rule changes. Will these lobbyist revelations change the way the wind blows in Washington? We will find out soon enough.

Texas Gives Rise to Community Loan Centers

4602682874_f08a4ac96f_zTexans have always had an independent spirit. Direct lending has a long, proud history in Texas, dating back to the antebellum, when Galveston mills would give cash advances to planters on the cotton bails they agreed to deliver.

By 1859 there were over 3,000 private lenders operating in Texas, making small cash loans against the borrowers next payday. After the fall of the Confederacy and during the time of Reconstruction, the government banking system was turbulent, and it fell to private, direct lenders to keep Texas running strong. (more…)

Responsible Lending, Smart Borrowing

16836479081_e777a4d1f7_zWhat is “responsible lending”? It’s a term you see often in financial news and blogs, but what does it mean exactly?

It is the exact opposite of what many refer to as “predatory lending.” Those kind of lenders are sneaky, sometimes even illegal, who try and trick people into borrowing money to get them on the hook for a prolonged period of time. Predatory lenders use sneaky tactics like hidden fees and balloon payments so they can sneak up on their own customers and take them for every penny they can.

On the other hand, responsible lenders treat their clients with respect. They are up front about the terms and conditions of the loans, and most of the time will not loan money to someone who can’t afford to repay it. Responsible lenders are men and women who run legitimate businesses and seek to grow that business by doing things the right way, and providing good customer service. (more…)

Extreme Payday Loan Regulations are Doomed to Fail, and Here’s Why

524195139_1c8a3ec97c_zIt seems that legislators and special interest groups are always waging war on Payday Loans. It has been this way for years on the municipal, state, and federal levels. Over the last decade, more regulations have been put in place for the private-lending industry than ever before. A new federal watchdog group the CFPB (Consumer Finance Protection Bureau) was even created to oversee this industry.

And how is that working out for them? Well, not the way they would like.

These groups seek to eliminate payday loans, without taking into consideration one important fact – millions of people rely on these loans.

Here’s a more specific example: the State of Ohio vs. Payday Loans


3 Things You Didn’t Know about Payday Loans

435300495_1c51aa37ee_zThink you know everything there is to know about payday loans, based on what you read in the news? Think again!

Get Money in Hours, not Days

Applying for a bank loan is a long and tedious process, rife with verifications, interviews, and stacks upon stacks of paperwork wrapped up in red tape. This is nothing new, it’s common knowledge. Borrowing money is hard – if it was easy, everyone would be doing it.

But payday lenders are not the banks. The borrowing process has been streamlined and simplified. Perhaps more importantly, the process has been sped up. (more…)

NPD Scholarship Competition a Huge Success


The winner of the 2015 NPD Scholarship Competition, with over 1000 votes, is Marshallee Brown! Congratulations to her! Read the winning essay here.


After a year hiatus, the National Payday Scholarship Essay Competition has returned bigger, better, and smarter than ever. After taking more essays than ever before, it’s safe to say the response has been out of this world!

The last batch of entries were posted the last day of July, and now the voting process is about to be closed out, as well.

All votes must be cast by tonight at midnight!

Anyone can vote for an essay, no sign-ups of any kind required! So post, share, click, read, and educate yourself to the interesting ideas being presented from students all over the US.

Voting is easy – you can give the essay a Facebook “like” a Twitter “tweet” or a “+1” on Google Plus. Or do them all and give your favorite essay three votes! (more…)

2015 NPD Scholarship Entry: Jumping Down the Rabbit Hole

scholsmallBy: Charlie King

Money. It seems to be the one true goal of our modern society, and we will do almost anything to acquire it. After all, think of all the wonderful things one can do with a bank full of cash. Buy new cars. New clothes. Go on the vacation of a lifetime. While all of these sound like amazing benefits, at what cost do they come? There are two sides to the coin, and payday loans can be the saving grace for some, but the devils advocate for most. Much like Alice in Wonderland, jumping down the rabbit hole and into a payday loan can end you up in a heaping load of trouble-and debt. (more…)

2015 NPD Scholarship Entry: A Good Idea Gone Bad

scholsmallBy: Mandy Hill

Payday loans are a good idea usually gone bad. The idea of getting a small loan before your next pay check could be a lifesaver for someone in an unusual, emergency situation. However, I think that most who apply for and obtain payday loans don’t know what they’re in for, which usually ends with the person getting hurt financially instead of getting a little bit of help in a tight spot. The way that payday loans work, most people end up having to pay a boat load of interest that they didn’t have the money for in the first place. This will lead them to have to take out another payday loan, and the cycle continues until they owe double, if not more than double what they originally borrowed. I believe the reason why so many people get sucked into this cycle is because they don’t understand exactly what a payday loan is and the potential risks involved. (more…)

2015 NPD Scholarship Entry: Payday Loan Options

scholsmallBy: Hart Robbins

Payday loans certainly fulfill a financial need in our society and probably worldwide.  In many instances these loans are life savers to meet a specific financial need.  Many financial institutions do not offer loans of this type and especially of this smaller size therefore payday loans have a niche in the financial arena.  Online availability along with store front locations of payday loans also helps make this product available to almost all people.  One possible modification that could be useful would be to use the payday loan to help create a pathway to establish or reestablish a person’s credit standing or pay history.  For instance if a client is unable to pay their payday loan in full when due, the payday loan company could convert the client’s payday loan into a weekly or monthly term loan.  This would help the client pay their loan back and allow the payday loan company to begin offering small term loans to their payday loan clients that have a good proven record of paying their payday loans back on time.  This would present another source of revenue for the payday loan company and offer another needed service to their payday loan clients.  (more…)

2015 NPD Scholarship Entry: Steps toward Equal Opportunity Attainment in America

scholsmallBy: Carlton Adams

In participating in a capitalistic system, great difficulty lies in striving to maximize revenue while also aiming to provide a quality service to the public. Finding balance between these two areas for a for-profit companies comes out of thoughtful reflection and a general willingness to reconcile these two concepts. However this is of particular importance in the payday loan industry given the seriousness of accruing debt in a society that significantly values credit scoring and the risk associated with lending money to an individual. At the same time though, in America’s managed market structure where private companies are afforded a considerable deal of freedom, the resulting effects (whether positive or negative) that these services have on their consumer base quality does not necessarily have to be a priority for these for-profit companies that inherently exist to generate revenue. (more…)