Delaware: Payday Lenders Bypassed Regulation by Calling Themselves Installment Lenders

Delaware’s Payday Loan Law That Limited The Number Of Loans Borrowers Could Take Out In A Year Was Bypassed By Lenders Who Said It Only Affected Their Short-Term Loan Product And Not Installment Loans Which Also Charge 398% APR.

“Last year, Delaware passed a major payday lending reform bill. For consumer advocates, it was the culmination of over a decade of effort and a badly needed measure to protect vulnerable borrowers. The bill limited the number of payday loans borrowers can take out each year to five. “It was probably the best we could get here,” said Rashmi Rangan, executive director of the nonprofit Delaware Community Reinvestment Action Council. But Cash America declared in its annual statement this year that the bill “only affects the company’s short-term loan product in Delaware (and does not affect its installment loan product in that state).” The company currently offers a seven-month installment loan there at an annual rate of 398 percent. Lenders can adapt their products with surprising alacrity.” [Cincinnati Enquirer, 8/11/13]

Advance America Started Offering Installment Loans In Delaware After Payday Lending Law Was Enacted. “Spartanburg, South Carolina-based Advance America, a unit of Grupo Elektra SAB, has also increased its offerings of installment loans in recent years, Jamie Fulmer, senior vice president for public affairs, wrote in an e-mail. It started with offerings in Illinois in 2008, Colorado in 2010, Missouri in 2012 and Delaware and Wisconsin this year, he said. “We are always looking for ways to meet the needs of our customers with new products,” Fulmer wrote.” [Bloomberg, 5/29/13]