Press – Experts urge caution on payday loans
0 Comments | St. Joseph News – Press, Dec 16, 2009 | by Ray Scherer
This year’s tight economy may compel many consumers to search for a satisfying Christmas through payday loan stores and pawn shops.
Such legitimate loans may be a tempting way to pay for Christmas, but carry pitfalls after their use, according to consumer protection officials. Many of the companies typically resort to television advertising in December to hawk their services.
One payday loan outlet in St. Joseph reported stable activity compared to this time a year ago. American Gold Mine co-owner Dennis Kovac said the loans offered through his business are fully explained to customers before they exit the door.
“We make sure they understand the repayment terms,” he said. “We don’t want any surprises.”
Many of the customers don’t reveal for what purpose they seek a payday loan, Mr. Kovac said, so it’s not easy to determine whether Christmas is a major driver. Two other St. Joseph payday loan outlets declined to discuss their level of activity prior to the holiday, referring questions instead to corporate offices.
Two consumer protection officials offered advice to consider regarding payday loans.
“There are more payday and title loan lending (businesses) in the state of Missouri than there are McDonald’s, Burger King, and Starbucks combined,” said Jana Castanon, a community outreach director for the Consumer Credit Counseling Service. “The average person renews their payday loan five times before they are able to make payment in full.”
More than half of those who take out payday loans have more than one other simultaneous loan, Ms. Castanon said.
A person should never use a payday or vehicle title loan as a means to purchase Christmas gifts, she said. It’s better instead to shop at thrift and dollar stores or to create homemade gifts such as framed photos.
“Savings is the key that will enable people to not have to use payday lending when situations come up,” Ms. Castanon said.
The office of Missouri Attorney General Chris Koster monitors consumer complaints that arise from payday loan use
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Jul 31, 2010
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