Uptown in the News
March 10, 2004
A study by the Monsignor John Egan Campaign for Payday Loan Reform, reveals an expensive cycle of debt and refinancings for some customers. The campaign, which backs legislation to cap rates at 36 percent, is releasing its report today.
It shows how payday lenders have legally gotten around laws designed to protect customers from racking up too much debt. State laws passed in 2001 capped loans at $400 and limited refinancings, or "rollovers," to two for any loan with a term of 30 days or less. Lenders, which had offered 14-day loans, began offering 31-day loans to get around the rules.
There are alternatives to payday loans, though limited.
North Side Credit Union, 1011 W. Lawrence, offers what it calls payday alternative loans, or PALs, which are loans of $500 for six months to people who live or work in Uptown, Edgewater, Rogers Park or Lake View neighborhoods for an annual percentage rate of 16.5 percent, or about $25 in interest.
"It probably costs you $25 to make the loan, but you really need to view this on a longer-term, relationship basis," said North Side chief executive Ed Jacob, who said that through some of the loans he can gain new long-term customers.
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