Installment lenders worried about payday loan legislation
HUNTSVILLE, AL (WAFF) - "Don't get a payday loan," says Sam Frazier, president of Frazier Loans.
He loans money for a living, but don't mistake his business for one of those neon signs that offer fast money with no credit check.
"It is very important to understand the difference between the payday loan industry and the installment loan industry."
And this concerns him as the State Legislature tackles the issue of high interest payday loan companies. He says installment loan companies like his, should not be lumped into the same category.
"The practices of payday loan companies do trap people, and they are again based on the cycle of debt. The reality is very few people can repay it in two weeks, so you are basically setting people up to fail."
He says the average payday loan is $375, and you have two weeks to pay it back. With a average fee of $65, a person ends up paying APR of 455 percent.
And that's when the cycle begins.
Two weeks later, a borrower will more than likely have to renew or rollover their loan. Installment lenders, like Frazier, are under the assumption that a borrower will need a little more time to pay off their debt.
If they can pay it back in two weeks, no fees are owed.
"If these regulations apply to us, then a lot of people wouldn't have another place to go."
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