Defense Department, military families at odds over loans bill
Consumer advocates are trying to block legislation that would allow short-term lenders that cater to military families in need of emergency cash to charge higher fees on loans.Posted — Updated
The moves would double the annual percentage rate charged on a 12-month, $1,000 loan, from 36.6 percent to 76.4 percent.
Industry advocates argue that the fees don't amount to charging exorbitant interest rates, and they note that the fees on such small loans result in payments that are only a few dollars more each month.
"We will absolutely admit the cost of loans will go up. (Our fees) haven't increased in 28 years," said Everett Wallace, a spokesman for the short-term lending industry.
The Department of Defense opposes the legislation, saying it allows lenders to exploit young service members and their families.
"Certain lenders often times (say) they specialize in military-type loans. They absolutely prey on these folks," said Mike Archer, regional legal assistance director for the Marine Corps. "It's like someone throwing you a lead life preserver. It's going to take you down."
Military families see the lenders in a different light, however. They say these companies come through for them when traditional banks don't.
"You have to go to companies like this because they do understand that you're military. They do understand that you move around a lot," said Elle Grandstaff, whose husband is a Marine.
Grandstaff said the bill would protect the industry and improve access to personal loans.
The North Carolina Office of the Commissioner of Banks also doesn't believe the existing state law should be changed.
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