Afraid that image dilemmas afflicting the country's pay day loan industry will sully its reputation, Banco Popular has made a decision to stop providing loans that are such.
The Puerto Rican banking business, that has a big mainland U.S. existence based in Chicago, is discontinuing a pilot system for pay day loans in Texas and halting brand new loans at its foreign exchange workplaces in Ca and Florida. Together, the programs have actually about $425,000 in payday advances outstanding.
Pay day loans are usually two-week loans for a couple hundred bucks designed to assist customers with temporary cash-flow problems--something to tide them over until their next payday, when they're expected to pay from the loan. The industry has arrived under fire in current months because some shops enable clients to restore their loans--which carry annual portion prices since high as 1,300 percent--until they've been profoundly with debt.
Banco Popular failed to enable loan rollovers and offered "better than industry terms," according to bank officials, whom said their yearly portion prices had been below 500 %.
However, the financial institution happens to be painted using the brush that is same other payday lenders and it has made a decision to take out of this market--something officials consider necessary, because of the aggressive environment toward payday loan providers, but one thing they think could harm clients.
"It may drive them to unpleasant options, which most product experts try not to completely understand," stated Richard Carrion, leader of Popular Inc. in San Juan, Puerto Rico.