Payday Loans in Iowa: Subprime Report
Nickname: The Hawkeye State
Population: 3.05 million
Capital: Des Moines
Recent years, payday loans in Iowa have become a habitual reality. Payday lenders advertise their service quite aggressively. They say this type of loan is great decision for those who hit temporally financial bump. On the other hand, many politicians, lawyers, and civic activists sound the great and loud alarm about them. They say, for needy people, such loan is not a blessing, but a heavy curse in disguise. They call this lending predatory and unaffordable even. And this sounds like a heavy charge. Where is the truth in this simmering discussion?
The next question of no less importance is: who and why use these loans. No, seriously, let’s just think about it for a minute. The supporters and opponents of payday lending have been grousing about it for a decade at least. On federal level. Hundreds of reports articles and tweets even. The logic says that most people should beware of payday storefronts and what they offer. And even without all the fuss, it should have been like that. Because the debt is always easy to obtain but hard to repay.
Especially, taking into the account that no lender work for free. Meaning; you are in the difficult situation, has lack of money. Everyone has been there in their life. If you borrow money from the lender, you return additional sum. Significantly more, as a rule. That’s called the rates. Seems unprofitable, right? Even though it’s fair towards the creditor.
But, why people keep on borrowing, if it is unprofitable? And if that’s fair towards one of the parties of the agreement, why the opponents aren’t happy? Does a payday loan cost the nation that much?
Let’s try to get a clue!
A start from the roots. History of Payday Loans in Iowa
A loan is, probably, the most ancient thing in the world. Maybe lending is as old, as the human speech is. Not payday loans Iowa, sure, but the creditor–debtor relationship in general.
For example, the first code of laws, regulating the lending sphere, is the Hammurabi Code. The payment with the crop was the most popular method at that time. A debtor could, as well, offer his wife, child or servant into creditor’s possession for three years, to work the debt off.
The Medieval Salic Law in turn, prescribed 40 days of grace period for a debtor who did not repay on the mature date.
As for modern history, online loans Iowa aren’t new. They are product of salary buyers, pawnshops and check cashing evolution. The pawnshops are, probably, the oldest from these three.
In a pawnshop a person could exchange something valuable, like, for example a jewelry, on money. They also had a right to return the sum on certain date and get the collateral back.
Salary buyers appeared at the end of 19th century. They “buy” the debtor’s salary for the immediate credit. No need to point out; the credit was significantly smaller than the wage they took.
At the beginning of the last century the check cashers appeared. They give money for the post-dated check with the client’s sign and get fees for that.
At the end of the century the government stopped regulating the sphere of the banking relationships. Small banks collapsed, beaten by the big ones. And that big ones did not give microcredits to population. That’s where the payday loans stepped into game.
And when the web-space become developed enough to have a niche there, online payday loans in Iowa just did that.
Why Choose Payday Loans in Iowa? Buyers’ reasons to use them
When we’ve sorted out the origins of the credit as a phenomenon, let’s define the modern payday loans in Iowa. And then have a look at reasons people have to use them.
So, payday loans not only in the state, but in the world are quite the same. It’s a short-term and relatively small sum of money that a client gets from a commercial financial institution. Not from the bank, it’s important. The due date for the credit is, typically, the day, when the creditor gets the next wage. That is why these transactions are known as payday loans. The main peculiarities of these loans we can divide into two types—positive and negative.
The lenders prompt the positive ones willingly. They are:
Comfort. The client can do everything in no time in a payday storefront, or online;
High chance of approval. For payday loans Iowa no credit check is the main key to popularity. With small dollar loans it really doesn’t matter, what your credit score is.
Time-saving. Everything is quick. So a client can get funds on their account in half an hour or so.
Talking about the disadvantages, naturally, the lenders do not hurry to disclosure them to customers. And the disadvantages are:
Very short term that a client has to cover the debt—typically, two weeks;
A highest APR you can imagine. Technically, the agreement should contain the information about online payday loans Iowa APR. Moreover, the lender you work with has no right to hide the information. But, according to the acquisition, only 32% of them gave a straight answer to the question1. The rest denied answering or gave misleading answers.
This lack of time and misinforming prevents users from weighing the risks accurately.
Guides to Payday in Iowa Cities. Easy to find
Before you start your research, we want to inform you about several important aspects of payday lending in American States.
There are several groups of areas in the US with different attitude towards payday loans.
The first one consists of States, which have never approved or legalized payday lenders’ activity. They are West Virginia, Connecticut, Pennsylvania, Massachusetts, Maryland, and Vermont.
In the States of second group, such loans are not prohibited technically. The point is; the laws put the tough limits to the APR the creditors could have. The cap is so tough, that it’s unprofitable to have business there. The examples are Arizona and Montana.
Oregon, Colorado and Maine make the third group. In these States the APR is capped by the law as well. But the limits are not tight enough to prevent lenders make profit good enough to continue their business.
The last, the most numerous cluster consists of areas, where loans with high APR are OK. In some of them, the laws have certain measures to limit the APR and possible size of fees. The lawmakers did that to protect the consumers from the danger of the debt trap. In others, only the cap for APR or fees has an upper threshold. And in some areas the legislation is extremely mild and caps neither APR nor the fees.
Iowa belongs to third group. Regulates the industry by the laws. That is why small credits of the kind are in hand for consumers in any city or town of the state. Thus, we can analyze the impact they produce to the area’s economy. Along with factors, which drive people to this decision.
But the good news is; the consumers can always go for a legislative support.
Payday loans in Des Moines, Iowa
It may seem, Des Moines is not a good place to have lending business. Because, come on! The Insurance Capital of the US, one of the important political spots in the country. The city of many employers, and so on. But payday loans in Des Moines, IA are quite popular, despite these factors. Doesn’t matter that unemployment rate in the city is just 2.1%. That is slightly lower than that in IA and significantly lower than 3.6 nationwide. Maybe the wide usage of the service has something to do with the percent of poverty in the city. For the population of 213, 853 that 18.1% is a large portion2. And we need to note that the Median Household Income in the city is lower than average state level.
Payday loans in Davenport, Iowa
Davenport city is a great check-point for those who likes quite life, brighten with a lot of cultural events. The amateurs of walking across green areas and hiking will also find a place for them. One of the parks—and Davenport has around 50, will be a perfect choice for them. Museums, festivals and a Science center are always ready to welcome their guests.
In short, Davenport is really fine city, with its fair amount of entertainments and impressions. It’s a shame payday loans in Davenport, IA have so many potential clients. Look, and see why. Among 102,085 people, living in the city, 17.1% are in poverty, because of low income. Per capita yearly income is just around $26,0002. That digit makes the whole city kind of easy target for the lenders to aim at.
Payday loans in Waterloo, Iowa
Waterloo is a small town of 67,798 people2. It has a fair share of small American town charm. It has places of interest and museums. Unfortunately, it has, as well, problems to decide. Sure, Payday loans in Waterloo, IA are available for consumers of legal age. But in view of big number of people, living in poverty—17% and high rates of unemployment among people of color… This accessibility can do harm to residents’ financial position.
Payday loans in Cedar Rapids, Iowa
The second largest city in the state, the area can offer easy-available Payday loans in Cedar Rapids IA, for sure. But it has better options to be proud of. For example, their stable economy, based on the corn production. Or their crafting of aerospace products. Or their arts and culture places of interest, such as Cedar Rapids Museum of Art.
Probably it’s due to stable economy and the range of employers the economic situation for the citizens living there’s good enough. Median household income in the city is $56,8282. Which is higher, than average Median household Income in the State, actually. The difference is small but it’s still higher.
Payday loans in Sioux City, Iowa
Sioux City is an area with 82,396 of people, living within the limits of this great Missouri River port. Several large employers and many of smaller ones—the total as of 2012 was more than 5,000—registered in there.
And despite that per capita income for the period of year is below $25,0002. The 14.7% of poor people don’t surprise the researchers with such a statistic, really. And naturally, payday loans in Sioux City, IA are service of high demand.
Payday loans in Iowa City
Speaking of Payday loans in Iowa City, we must admit—situation in this place of culture, healthcare and education is sad. Iowa City is one of the smartest places in America and still, many people risk to fall victims of predatory lending.
Why could lenders receive a great gain from the residents? It’s simple—the city where 28% of people are living in poverty2 is a Wonderland for lenders.
An Analysis of Payday Loans in Iowa—who are the borrowers?
As you see, we have overlooked just six most populated places in the State. At least five of them are good goldmines for possible lenders. And there are many others residential areas in Iowa. With payday storefronts on their streets. That’s not to mention the great variety of payday loans in Iowa a common costumer can find on the Internet. If there are so many offers and lenders you can easily contact with, then people require these options. Who are that people exactly, and what makes them chose lending stores over credit card and other options?
But very often the clients of 218 Iowa payday loan storefronts do not have a chance to go to the bank3. And bad credit behavior in the past is often not the point even. 17.9% of households in the country have a credit file too short to get a loan. And 7.7% more do not have a credit history. To make it clear; 39 million of grown-ups cannot have any traditional banking services4. They are, practically, forced to go to a payday lender, when need to pay for expenses.
By the way, the minorities and ethnic communities are more at risk, as more than 40% of Native Americans are credit invisible. Among African Americans the number is 53%4.
All those people are potential payday borrowers. According to the statistics, average borrower takes nine loans per year. An average (once again) APR for the loan is 390%. No wonder then that the lenders’ gain is more than $37 million in IA only3. On national level, by the way, the industry drains more than $8 billion every year, from the state8. And we mean the net profit—the money people spend to pay fees and commissions.
Iowa Payday Loan Rules and Regulations
Remember, we mentioned that the states in America differs in their attitude to payday lending and the industry regulations? Well, Iowa belongs to liberal states. Thus, the regulations are few, rather mild. The process is ruled with Delayed Deposit Services Licensing Act. This bill states that a dealer should fit in row of demands to start Iowa cash advance business.
The demands are the following.
First of all, a lender-to-be should fill the application and pay $100. This application gives him a possibility to obtain the obligatory license, in case he can prove his experience in the sphere. Besides, the start capital must be not less than $25,000.
The application can stay in the review process more than 90 days. After that it should be approved or denied. If approved, it’s valid for a year and then a lender has to renew it5.
Every single loan a lender gives should be registered and documented with the agreement. The law demands to write the contract in English and in Spanish. The information obligatory written in the contract includes: client’s personal data and contacts, loan size, fee size and APR.
If the client is a military, the Military Lending Act comes into play.
The same regulations apply for Iowa payday loans offerings online.
Iowa Rates and Terms
Every aspect of Iowa payday loans is regulated, Naturally, the law defines clearly both the rates a consumer should pay and the term of repayment.
So, going for a cash advance, Iowa residents can get no more than $500, for no longer than 31 days. Minimum loan amount is not defined, as well as the shortest loan life.
The lenders count the rates as follows; customer pays $15 for the first $100. Every additional hundred costs $10 more. Thus, for a $500 you pay $55. Therefore, the APR for cash advances in Iowa is fixed at 337% mark.
Iowa Payday Loan Restrictions
The restrictions prescribed in the law are also few. For example, one consumer cannot have more than two loans at time. He, as well, should pay all the debt at once as Iowa laws prohibit roll-overs. The term of the loan cannot last longer than 31 days. The lender can neither use any tactics to increase the fees for the loan. Even online payday loans lenders in Iowa are obliged to have physical location in the state. Otherwise, they cannot hold the business.
Important note: it’s prohibited by the law to use a fresh payday loan to repay the previous.
Consumer Protection in Iowa
As the government did not make any amends to the act for a long time, protective measures were updated neither. Therefore, there are no any special protective measures for online payday loans in Iowa.
But it’s useful for potential payday borrowers to know, that NSF cannot exceed $15. The same applied for the check, which the bank returns to the creditor without cashing it. And no matter, how long the check stays unpaid. The lender has a right to charge the fees just ones.
Active soldiers and officers at service have a right to get a loan with 36% APR.
And, at last, any consumer can address Iowa Division of Banking or Consumer Financial Bureau Protection in case of lender’s illegal action.
How Do I Apply for a Payday Loan in Iowa from mypaydayloancash?
If you have weighed the risks wisely, and decided that payday loans in IA state are exactly what you are looking for, good! At the end of the day, it will shorten the process of borrowing significantly. In addition, if you behave wise, it could be great way to start a credit history. Or amend it, if you need.
If it’s the case, we will help you to find the best online cash advance propositions Iowa. We can do this immediately you visit our site and let us know how much is on stake.
Give us an email for we can reach out for you, fill the required information in and trust our professionalism.
The final thoughts about payday loans in Iowa
We would like to remind the residents of Marshalltown, Cedar Falls, and Dubuque, that online payday loans in Iowa are available. Council Bluffs inhabitants, citizens of Clinton, Ames, Urbandale and Mason City also can use the service legally. The same if fair for Ankeny, Bettendorf, West Des Moines and Marion. Just remember to be prudent, wise and attentive to the details in the loan agreement.
- U.S. PIRG. “Rent-a-Bank Payday Lending. How Banks Help Payday Lenders Evade State Consumer Protections”. uspirg.org. Accessed on July 12, 2019 from https://uspirg.org/sites/pirg/files/reports/Payday_Lending_2001_USPIRG.pdf
- U.S. Census Bureau. “Quick Facts”. www.census.gov. Accessed on July 12, 2019 from https://www.census.gov/quickfacts/fact/table/iowacitycityiowa,cedarrapidscityiowa,waterloocityiowa,davenportcityiowa,desmoinescityiowa,IA/PST045218
- CRL. “Payday Lending Abuses and Predatory Practices”. responsiblelending.org. Accessed July 12, 2019 http://www.responsiblelending.org/state-of-lending/reports/10-Payday-Loans.pdf
- National People’s Action. “Profiting from Poverty”. iowacci.org. Accessed July 12, 2019, from http://iowacci.org/wp-content/uploads/2012/01/Profiting-from-Poverty-Jan-2012.pdf
- “Delayed Deposit Services, §533d.3” www.legis.iowa.gov. Accessed July 12, 2019, from https://www.legis.iowa.gov/docs/code/533d.pdf
- “Median household income in every US state from the Census Bureau”. Cnbc.com. Accessed July 12, 2019 https://www.cnbc.com/2018/12/07/median-household-income-in-every-us-state-from-the-census-bureau.html
- The Ballotpedia. “State Debt”. ballotpedia.org. Accessed July 12, 2019 https://ballotpedia.org/State_debt
- CRL. “Payday and Car Title Lenders Drain $8 Billion in Fees Every Year” responsiblelending.org. Accessed July 12, 2019 https://www.responsiblelending.org/sites/default/files/nodes/files/research-publication/crl_statebystate_fee_drain_may2016_0.pdf