Military Payday Advance
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The military payday advance loan is a way that a member of the Armed Forces can cover money emergencies that crop up unexpectedly before his next payday. These quick lending agreements can often be secured within minutes at a local lending company that specializes in these loans or within twenty four hours when applying online. Just like the civilian version of these lending agreements, the military payday advance loan is available to those who are employed and have an active checking account. For the majority of lending companies who handle these lending agreements, there are no credit score checks and no debt to income ratio inquiries. This leaves the borrower who has a less than stellar credit record or who already may have strangling debt payments free to apply for the fourteen day lending agreements, with payback schedules based on the borrower's next paycheck date.
A paycheck advance lending agreement has been labeled by the Armed Forces as predatory in nature because of the incredibly high interest rates. And in many cities where there military bases, lenders who specialize in the military payday advance loan pepper the landscape around the bases. In fact, studies have shown that members of the Armed Forces are three times more likely to have taken out a military payday advance than the civilian population and that one in five soldiers has used the paycheck advance system at least once. One of the main reasons that the members of the Armed Forces are more likely to use these lending agreements as a stop gap measure is because the average salary for these men and women is quite low with the average salary being around twenty thousand dollars and some making no more than seventeen thousand dollars annually. Additionally, the soldiers most likely to use these services are young and inexperienced at handling money. Sadly, too often the soldier's family suffers as a result.
One of the reasons paycheck advance companies loves to camp in front of Armed Forces bases is because a military payday advance is much less risky lending agreement than its civilian counterpart. The civilian demographic that uses the services of this type of lender is many times more at risk of losing employment than a soldier ever will. One of the reasons given by paycheck advance companies for such high interest rates and fees is high risk nature of its customers. Studies point out that the transient nature of many of those using payday lenders often produces defaults on loans, driving up the costs for the lender to recover wayward loans. But mebers of the Armed Forces have a job week in and week out and even if the soldier goes overseas his family remains near the base and the Internet allows the paying of bills even from thousands of miles from home. "All scripture is given by God and is profitable for doctrine, for reproof, for correction, for instruction in righteousness." (I Timothy 3:16) Not only that, but in their basic training and ongoing instruction, members of the military are urged and commanded to pay their bills on time, thus creating a perfect hothouse environment for the military payday advance lenders.
On the civilian side of this story are the absolutely bizarre interest rates that are charged for these fourteen day rates, but not if they are paid back with interest on the fourteenth day. A one hundred dollar loan may only cost a person, military or not the sum of one hundred and forty dollars. But in some states, if the civilian does not pay back the loan in full and statistics show that only two three borrowers in five do so on time, the annual percentage rate can reach eleven hundred percent! The military payday advance was ripping apart military families so much that the 2007 Military Authorization Act enacted by Congress and implemented by the Department of Defense ordered this lending practice be limited to 36% interest for all military personnel. Additionally, these lenders were ordered to stop paying off other credit accounts that soldiers might have and refinancing them with even higher interest loans by the payday lender. Many other provisions in this law were also enacted to further protect military personnel and their families from such predatory practices.
It is not surprising to discover that two in five borrowers for Armed Forces payday advance loans and almost three in five civilian borrowers cannot repay their fourteen day loans in full, which means that more interest and costs are added on and the debt begins to mount. But the question begs the answer: where are these people who live paycheck to paycheck and have almost not savings going to find help to handle costly emergencies? Service men and women may make more than the law will allow for welfare and government assistance as well as many civilians. Yet the income is not enough to pay the high costs of living even if there are no amenities in the budget. Churches may have some limited help, but probably as a onetime small gift, and usually only for those who attend its services. As much pain and burden that this lending practices bring, the military payday advance and the civilian paycheck loan companies offer some relief, even if only temporarily. Non-profit organizations, churches, banks, social agencies and other interested parties must step up their efforts together and individually to provide lending education for the tier of the American population that struggles how to make ends meet.
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