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Thoughts on Payday Loans’ Terms and Fees

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According to Finextra, Payday lender Wonga is to expand its business into longer-term financing for online retail purchases.

Commenting on the article, Wonga takes on credit cards with e-finance loans, Dan Stavros, Vice President, CoreCard Software Inc., had this to say:

Payday lenders have moved into short-term revolving credit to avoid some of the strict regulations on fees and payday loan renewals forced on payday lenders by many states. Also, the payday lenders are partnering with national banks (much like credit card issuers) to be able to offer loans under federal rather than state regulations which are much more favorable to the lenders. Since many payday loans are extended beyond the next payday its only logical to offer a short-term (less than 90 days)  installment plan up front and give the customer the ability to pay off the debt early without penalty while avoiding regulations that prohibit multiple extensions or excessive fees on traditional payday loans

 

 



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