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Obama Administration May Crack Down on Payday Loan Companies
As banks have been cutting Americans’ credit lines on credit cards and refusing to issue cards to new applicants, more and more Americans have turned to another source of short-term emergency cash: Payday loans. Although the payday lending industry is experiencing a boom now, all of that may change when President-Elect Obama takes office.
Obama has pledged to crack down on the payday loan industry, which critics say charges usurious interest rates and takes advantage of poor and uneducated Americans.
Plans that Obama has specified would include a 36 percent cap on the interest payday loan companies can charge and simplified information about loan fees, payments, and penalties. For example, payday lenders currently may make it very easy for borrowers to “extend their loan” and postpone payment, but often do not disclose the additional fees or finances charges that will be added to their balance.
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