Soft music plays in the background of a new TV ad
campaign as it urges viewers to only use payday
loans for emergencies. One scene shows a broken-down
car. Another depicts a young boy in a doctor's
office, his arm in a sling.
"Please borrow only what you feel comfortable paying
back when it's due," says Darrin Andersen, president
of the Community Financial Services
Association. A new emblem will tell borrowers which
lenders meet his trade group's requirements,
Andersen says in the ad.
The $10 million campaign, announced last month along
with some industry policy changes, came as states
from Virginia to New Mexico consider
legislation to limit payday lending practices. But
it's not stopping consumer watchdogs and people
already in debt from questioning the motives of an
industry whose loans' annual interest rates can
exceed 400 percent.
"Payday lenders make it easy for consumers to get
trapped in predatory debt," said Teresa Arnold,
legislative director for AARP in South Carolina .
Payday lenders offer quick cash advances for a fee
secured by a postdated personal check from the
borrower. Customers are supposed to repay the loan
once they receive their next paycheck. Borrowers who
can't pay often "roll over" the loan repeatedly,
leading to more charges that can quickly add up and
lead to a cycle of debt. Customers are drawn to the
lenders because, unlike banks and credit unions,
they don't run credit checks.
Source: abcnews.go.com
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