To the editor:

As a local nonprofit counseling and education agency for over 35 years, Housing and Credit Counseling Inc. (HCCI) has seen a need for responsible short-term lending for cash-strapped working families, and would like to comment on the Feb. 12 letter from Tom Linafelt of Quik Cash Holdings Inc.

The standard fee for a payday cash advance loan is $15 for every $100 borrowed, due when the customer gets paid. If a customer were to borrow $100 to fix a flat tire and repay the $115 loan when due, it could be an effective short-term loan with charges less than a $39 credit card late fee or a $35 insufficient funds check fee.

Local payday lenders can offer a customer up to two loans totaling $500 but there is no restriction on the number of payday lenders a consumer can visit for a $500 loan. A $500 loan with $575 repayment terms would cost more than any other form of short-term lending or penalty charge. HCCI has counseled individuals that went to a second payday lender to pay off an initial loan borrowed elsewhere.

A 2006 report by the Center for Responsible Lending, “Quantifying the Economic Cost of Predatory Payday Lending” estimated that before North Carolina banned payday lending, borrowers continued their loan repayment for an average of 28 weeks. HCCI teaches community classes showing cost-effective alternatives to payday lending for individuals who knowingly cannot afford timely loan repayment terms.

Robert Baker,
Housing and Credit Counseling,
Lawrence