moneylenders take the military to the cleaners
Not only do they finance wars by fronting capital needed to build bombs and other assorted weapons of mass destruction, they lend money to every cash-strapped Pvt. Tom, Dick, and Harry in the military, charging exorbitant amounts of interest as they go.
[Why is the Pentagon] adamant about getting Congress and the states to crack down on payday lenders, title lenders, rent-to-own companies and other similar predators?36%!!! That's a lot of interest! That's like getting only 64 cents out of every dollar you borrow. And if you don't make your payments on time that could quickly double and triple, so that you no longer derive ANY value whatsoever from the loan. On the contrary, you're being bled dry.
Because those lenders are ruthless in targeting consumers, military or civilian. Their goal isn’t just to make a loan, but to trap borrowers in a cycle of debt. They make their money by duping people into coming back over and over.
And they’ll do what it takes to get borrowers into their offices. “Predatory lenders market to the military through their ubiquitous presence around military installations and/or through the use of terms to affiliate themselves with the military,” a recent Pentagon report said. It said that borrowers might “believe that these loan products are sanctioned or approved by the military, due to extensive affinity marketing tactics.”
The report concluded that Congress and the states must rein in these small, short-term lenders by passing strict regulations, including a 36 percent cap on annual interest rates for loans made to service members and their families. Congress is considering a bill that would do that. But it and the states, particularly South Carolina, should protect all borrowers from these predators.
The Department of Defense report says predatory lending destroys morale, threatens military readiness and destroys families — and careers. For example, it cites a study by the Navy's Central Adjudication Facility that shows the number of security clearances it revoked or denied for financial reasons leapt from 212 in fiscal year 2002 to 1,999 in fiscal 2005. In 2005, financial problems accounted for 80 percent of all revocations and denials.So essentially, the butchers who send our young men and women to get killed like cattle, are complaining that predatory lenders bleed too many of them dry before they ever get to the battlefield. How ironic.
The military collected anonymous case studies from installations in its attempt to track the impact of predatory loans . . . Here are a few:Simply appalling.
- An Air Force E-4, assigned to Maxwell Air Force Base in Alabama, was behind on her car and rent payments and needed cash quickly. She had bad credit and thought a payday loan was the way to go. She got a $500 loan with an agreement to pay back $600 in two weeks. [if I calculate right, that's 480% APR] When she couldn’t pay, she took out other payday loans and was forced to do multiple rollovers on each one. To pay off the loans she obtained a $10,000 installment loan that carried a 50 percent APR. The total cost to pay off the payday loans was $12,750, and her total obligation to the installment loan company was $15,000. Her financial problems were a contributing factor to her pending divorce.
So, she started out owing $500 and ended up owing $15,000. Nice.
- An Air Force E-4, assigned to Scott Air Force Base in Illinois, had payday loans over seven months with two lenders, totaling $900 owed in principal, with $200 in fees each month to roll over the loans. By the time she went to financial counseling, she had spent $1,875 carrying the loans. She also had a military installment loan for $7,000 and an additional loan for $13,000. The interest rate on the installment loan was 61 percent, and the loan agency would not allow her to extend her repayments.
Notice how they pick on women - no doubt, single mothers working hard to feed their children.
- An Air Force E-4 assigned to Robins Air Force Base in Georgia borrowed $400 from a payday lender. She couldn’t repay it, so she went to a second payday lender to pay off the first loan. This process repeated itself five times until she was paying $1,200 per month to maintain the loans. By the time she got help, she had paid $3,000 on the $400 loan. She eventually declared bankruptcy.
Which will solve her problems temporarily, until they put her on every black list in town.
- A Marine E-2 assigned to Camp Pendleton in California and his wife accrued 10 payday loans with the principal totaling $2,390. The monthly finance charge was $422. He got a no-interest loan from a military relief program to repay the debt.
ALL loans should be NO INTEREST. And people should borrow money only when they NEED it - not to consume garbage.
- An Army E-7 assigned to Fort Jackson had two payday loans ($1,862), a car loan ($37,550) and two military installment loans ($15,400). The debt from his car payment, installment loans and payday loans were too much for his budget. Prior to paying off the loans, he was harassed and threatened by collectors, closed his bank account and was sued. The unit intervened in collecting on his debts.
$37,500 for a car loan??? What kind of cars are they marketing to these personnel?
Most of the cases involved junior enlisted personnel; 80 percent of the Army cases involved grades E-1 through E-4. Unfortunately, many had already been sucked in by unscrupulous lenders by the time they sought help. Many had received harassing phone calls, threats that their commander would be contacted or assertions that their pay would be garnished. Some were disciplined as a result of their attempt to solve financial problems through predatory loans. Disciplinary action ranged from letters of reprimand and non-judicial punishment to loss of promotions and separation from the military.
- An Army E-6 at Fort Jackson had three installment loans equaling $2,660. He owed $1,000 to a rent-to-own company. He was threatened that his wages would be garnished. He closed his bank account, and his unit got involved in the collection action and disciplined him.
We can’t have a ready military if we allow this to continue. Frankly, these legalized loan sharks are wreaking similar havoc among civilians.
They aren’t the kind of people I’d do business with. Lawmakers should revoke their free pass to have their way with our citizens.
They have their way with Americans.
They have their way with the world.
They may own the banks, but they take us all to the cleaners.