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Oklahoma Payday Loans
Until recently, in Oklahoma, the payday loan was a loan-of-last-resort for the working poor. The middle-class rarely even heard about short term postdated check/payday lending. Now lenders are setting up shop in the Oklahoma suburbs and near college campuses. Correctly used, they fill a need that banks do not. The downside, many consumer advocates say, is they also promote a treadmill of debt for the consumer.
Payday loans can be a good thing for people with jobs and checking accounts who suddenly need cash in a hurry. In states that have enabling legislation, the loans are granted for one or two weeks and "secured" with a postdated check. If the consumer cannot afford to cover the check on the date due, the lender will roll over the loan for another week or two, adding another fee and raising the amount the consumer has to pay back.A payday loan can help someone out in an emergency, provided that he or she borrows only once. Lenders will say that a payday loan is better for the consumer than a bounced check.
In 1997, the Oklahoma Legislature passed several language changes to Title 14A. In the area of minimum loan terms, the changes eliminated a common practice of bi-weekly payment schedules, setting all payments at least 30 days apart and a minimum of two scheduled payments on most loan contracts. The resulting consumer benefit is a maximum of one (10%) acquisition charge within a two month period versus up to four times in the previous lending environment.
This change appears to have affected the postdated check, payday lending practitioners who seem to have scaled their standard one-month, $300-$600 single-payment loans to the $100 or less amount which was unaffected by the legislation. Consumer Credit statistics indicate that the Oklahoma average loan origination increased from $272 in 1995 to $353 in 1998 resulting, we believe, from the consumer electing a loan product containing more manageable extended terms than a two week loan offers. It is expected hat the industry will aggressively seek legislation that will enable the origination of larger payday/postdated check loans, thus repealing the 1997 language.
Payday loans can be useful but there are some alternatives: loans from friends, installment payments, overdraft protection, payment plans from utility companies, credit counseling, or even delayed consumption.
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