| | The Credit Union Is Minting No Advantage From Its Members | | According to the Consumer group, quick cash loans offered by some credit unions as alternatives to high-cost payday loans are quite risky and deceptive and require scrutiny. | | Posted on : NetForce Press (02 July, 2011) | | | |
According to the Consumer group, quick cash loans offered by some credit unions as alternatives to high-cost payday loans are quite risky and deceptive and require scrutiny. Though payday loans allow cash-strapped consumers to take out small loans against their next paycheck, ARP reaches four hundred percent or more. Study has revealed that in recent years, many credit unions have introduced payday loan for members who face a temporary cash crunch.
Lauren Saunders, an attorney with the National Consumer Law Center claimed that there is hardly any difference between some of the loans and traditional payday loans. Moreover The National Credit Union Administration that formulates the federal credit unions, recently laid guidance to its members and warned members about risks, compliance issues and responsibilities that is associated with a loan program.
John McKechnie, spokesman for the agency passed the letter in response to the rapid growth of short term loans programs. In addition, Saunders claim that Federal chartered credit unions are forbidden by law from charging more than eighteen percent for the loans, but it is awful that some charge enormous fees that mints higher rate of interest. Saunders' consumer group claimed that there must be cap on APR on payday loan, but Brad Beal, president of the credit union added that the agency is just trying to find out an economical way of availing the loan.
The reports reveal that Nevada Federal Credit Union says it offers a zero percent annual percentage rate, which is obviously surprising but later it was discovered by Brad Beal that charges on the application fee of seventy dollars for a two week loan is seven hundred dollars or sixty dollars for the members with direct deposit. Brad Beal also throws light that the amount is half the fee charged by the average payday lender and even said that the agency is not taking any advantage of the members. On the other hand the National Consumer Law Center states that for seventy dollars, the fee goes up to four hundred dollars and for a two week payday loan, the APR reaches four hundred fifty five percent. |
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