by Barbara Nevins Taylor
A proposal moving through the New York State legislature would allow storefront check cashing businesses to make short-term loans for $300 to $2,000 for 90 to 180 days with an interest rate of 25 percent. A lineup of consumer advocates and the Bloomberg administration suggests the bill is a wolf in sheep’s clothing that will trap consumers in debt. New Yorkers for Responsible Lending says, “The annual percentage rate of the loans, given the list of fees set forth in the bill, would be as high as 204 percent.”
Stephen Altobelli, a spokesman for Financial Service Centers of New York, which represents 660 check cashing businesses, told ConsumerMojo.com, “Customers are looking for these kinds of loans and customers will know what the terms and conditions are.” But financial disclosure records raise questions about legislators’ ties to the industry.
Campaign Contributions
Campaign contributions are the source of the questions. The Financial Service Centers of New York is a steady contributor to New York politicians and donated over $592,000 to New York State Democrats and Republicans between 2000 and 2012 .
Sponsors of the legislation to allow quick cash loans are standouts on the contribution list. In 2011 and 2012 Bronx Democratic Senator Jeffrey Klein, a key sponsor, received $10,300 in 2012 and a total of $57,100 since 2002. In the Assembly, Manhattan Democrat Herman Denny Farrell, Jr. received $9,600 in 2012 and $36,600 between 2000 and 2012. Neither Farrell nor Klein responded to our requests for comments.
Here are a few key provisions of the legislation:
- 25 percent interest
- $25 application fee
- Processing fee, if you have insufficient funds
- $15 monthly maintenance fee
- Consumers would be able to refinance once if they can not make the payments on the first loan.
Tell us what you think about quick cash loans.
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