Payday loan services thriving in Oklahoma
Sunday, December 19th 2004, 5:26 pm
By: News On 6
OKLAHOMA CITY (AP) _ More than 400 payday loan businesses have opened in Oklahoma since the Legislature legalized the industry last year, and Oklahomans appear to be using the services.
Oklahomans borrowed $75 million and paid more than $10-million in fees during a four-month period earlier this year, records show.
``Obviously, we're offering a service here,'' said Lyndsey Medsker, a spokeswoman for Community Financial Services Association, which represents about 60% of payday lenders. ``There's a black hole in the financial services industry.''
David Blatt, the Community Action Project of Tulsa County's director of public policy, sees it differently.
``I think that probably Oklahoma fits the profile of the industry very well,'' said Blatt, whose group is opposed to payday lending. ``It's a high-poverty state, has a large working poor population and a large military population. It's ripe with financially fragile families.''
Some debate whether the payday loan industry targets people least able to afford the loans. The industry advertises as a once-in-a-while option for people who lack savings and might need a small emergency loan to pay a bill or repair a car.
In exchange for immediate cash, borrowers are charged fees that, if annualized, would sometimes equal more than 450 percent interest.
The average loan is for about $305 and the average fee is about $42.
A borrower getting a 12-day, $300 loan would pay a $45 fee _ the equivalent of an annual percentage rate of 465%, according to the Community Action Project of Tulsa County.
Jennifer Delcamp, vice president of Consumer Credit Counseling Service of Central Oklahoma, said she sees negative effects of payday lending.
``I don't think that the majority of people who get these loans are using them for that purpose (once in a while),'' Delcamp said. ``What I'm afraid of is someone renewing and renewing and renewing as much as possible.''
The industry warns against repeated use of the loans, but information obtained by The Oklahoman using a statewide tracking system that went online in July, showed that some people had multiple loans. Some had more than 10, and one person had 13.
Medsker said those who criticize the industry are quick to complain but offer no alternatives. She said payday loans are a good alternative to fees for bounced checks or credit card late fees for people in a financial crunch with little or no savings.