Payday loan causing Yuma woman financial hardship
October 14, 2008
One elderly Yuma woman said she is in deep debt over the payday loan she took out, then couldn’t afford to pay back.
The woman, who asked not to be identified because she doesn't want her family to know she is having financial problems, said she took out a $250 loan about a month ago to make ends meet.
"It has turned out to be so much more now," she said. "We didn't have the money to pay it back in full so we had to extend it and it keeps piling up so I can't afford to pay it off."The Yuma woman said she had took the loan out in her daughter's name because she had a minimum-wage job at the time. The daughter, who lives with her mom, is no longer employed and the loan is now up to $432.
"I live on a fixed income. I don't have any credit cards, no savings or retirement," the Yuma woman said. "There is no way I can pay it off now because the loan would take most of my money and it has to be paid back in full."
The Yuma woman also said not being able to pay back the loan has made her financial situation even worse because not only can she not pay it back, but has to choose between paying bills such as rent and utilities instead of the loan.
She went on to say the online lender is deducting the fees each time she extends the loan electronically from her account so they are being paid, but not the loan amount.
"You have to give them permission to do that to get the loan," the Yuma woman said. "It is so they will have a way to recover their loan."
She added that she still doesn't have the money to repay the loan and is having to extend it again, which means she will have to pay more fees.
Stan Barnes, chairman of the Yes on 200 Committee, says the Payday Loan Reform Act, if passed, would require online lenders to be licensed to practice business in Arizona.
Unfortunately, he said, for the most part online lenders are unregulated and may not even be in the country.
Barnes said under a provision in Prop 200, if an online lender loans money to an Arizona resident, it is considered a gift if they aren't licensed to do business in the state.
The Yuma woman said she is not against payday loans, she just thinks they need to be better regulated.
Source : http://www.yumasun.com