Ellington

Every American adult has experience in financial management. But despite the fact that we all manage our personal finances and make decisions every day about how to spend, save and invest, many of us remain baffled by the complicated systems behind our dollars.

Whether it is the interest rate on your credit card and its relationship to the fed's prime rate, or the fees your bank charges to cover a bad check, it can all be rather confusing.

When it comes to borrowing money, perhaps the most transparent and crystal-clear transaction a consumer could be involved in is a payday loan. It's simple. The contract is one page, and the person behind the counter walks you through it. Right there on the contract is the total amount you are borrowing, the fee you will be charged and the date your loan is due.

You can't "roll over" the loan after the due date. By Mississippi law, you must pay it in full. There is no compounding of interest, no adjustable rate, no interest-only option, no pre-payment penalties, no processing fee, no origination fee or documentation fee.

So, as a payday lender myself who hears all the time from customers that they choose payday loans because they are easy to understand, I was baffled by your Nov. 8 article (JFP Daily Person of the Day: Beth Orlansky) in which lawyer Beth Orlanksy says that my customers "don't know how expensive it is until it's too late." I was even more shocked by her assertion that customers "end up paying a new fee every two weeks until they finally pay off a loan several months later."

As a legal professional herself and an advocate for legislative change, it seems odd that Ms. Orlansky is completely ignorant to the current law governing payday loans. That law ensures that customers cannot pay only the fee. They must pay off the entire loan at the end of the loan term, which is between 14 and 31 days and averages 23 days. A simple five-minute phone call to the Mississippi Department of Banking and Consumer Finance would reveal that fact.

Ms. Orlansky, it seems, also knows very little about the consumers who use payday loans since she makes references that they are "poor people."

Actually, the average income for a payday loan customer is $39,000 a year, which would certainly not qualify as poor. Our customers are hard-working Mississippians who occasionally have an urgent need for a small amount of cash. Payday loans are one option that serves that need, and customers choose payday loans in full knowledge of the fee charged.

Many customers choose our loans because they are the most cost-effective alternative. It is less expensive, for example, to borrow $100 at $21.95 than to bounce a check and pay a $35 fee to your bank. It may be less expensive to borrow $300 for a fee of just under $66 than to pay a reconnect fee on a utility bill.

I would challenge Ms. Orlansky and the Jackson Free Press to take a closer look at the facts, to take out a loan, and to get to know some customers before continuing a crusade against an industry that provides important and extremely transparent access to credit to tens of thousands of Mississippians.

Dan Robinson
Borrow Smart Mississippi