Another Attorney General misses the mark about payday loans

Another state, another AG who can’t convince me that their alternatives to payday loans are better

http://www.nmag.gov/pdf/payday%20lending.pdf

This one is from New Mexico. It’s better than Washington state’s anti-payday loan missive, but not by much.

Here are your “alternatives”:

“There are other lenders, such as credit unions and installment lenders, who offer to make small loans at lower rates” - Few and far between. Payday lenders are much easier to access (compared with banks and credit unions that offer cash advances). This is particularly true with businesses like personalmoneystore.com, my-paydayloan.com or 2hourfastcash.com. Apply online from home, don’t guzzle gas in your SUV and lose precious time waiting in line.

“An employer might be willing to provide an advance on a paycheck.” - Again, this is a fantasy for most of us. The prince lifts the narcoleptic curse from the sleeping princess, with true love’s kiss. Right.

“Obtaining overdraft protection on your checking account.” - Know how much THIS costs? YOU DON’T WANT IT!

“The interest rate on a cash advance from a credit card is likely to be considerably lower than a payday loan.” - Only if you compute the dollars out over a full year. However, the vast majority of payday loans are paid off in the initial two-week period, not incurring anything additional due to rollover (which some states don’t even allow). Paying $20-$30 per $100 loaned via cash advance is 20%-30% interest. And most every credit card cash advance is hit for 30% interest. Where’s the difference, I ask you?

“Family and friends might be willing to help.” - OK, this AG adds “might.” Not a good idea, because you risk those relationships, should things go sour with payback. That has greater value than anything in your checkbook.