08 December, 2008

It has been revealed that by the time Bill Hunt came to her aid, the woman had already paid $150 in interest on a $250 loan in just six weeks' time.

It was just one of the many payday loan shops that have sprung up in strip shopping centers across the state. Although, self-respecting loan sharks possibly wouldn't dare require the interest rate these cheery storefronts get and by calling them "fees" instead of interest, the businesses can able to operate outside of state lending regulations.

Adding insult to injury, several payday loan lenders are set up under Texas law as credit counseling services.

It is quite difficult to cope with unwanted expenses, when you have inadequate finance at the mid of the month or say if your electricity is about to be cut off or your car repossessed or any of the myriad other things that can affect families living paycheck to paycheck.

According to Hunt a former business professor, he is totally tired of seeing hardworking folks victimized by what looks to him like predatory lending.

When Mr. Hunt finds one of his workers in that fix, he offers a no-interest advance on wages to repay the loan amount.

"It's just really difficult to pay back these loans," said Don Baylor Jr. of the Austin-based Center for Public Policy Priorities. "People end up paying $800 to borrow $300."

Mr. Baylor has been working for the last three years to obtain legislative safety passed. He's hoping for more success when the Texas Legislature convenes in January.

Identify that there is a need; the organization is also working with banks and credit unions to persuade short-term emergency pay day loan lending at affordable rates.

But the instant solution is to eradicate the need. This can be done through consumer education, said Todd Mark of the Consumer Credit Counseling Service of Greater Dallas.

"People have to understand the significance of having some emergency savings, "he said. "If you don't, you are already in monetary crisis."