Payday Underwriting Criteria

In his Dec. 10 column ["Screwing the Poor"], Frank Cagle alleged that payday lenders "hook the poor on a treadmill and extort up to 400 percent interest on their loans." This allegation is not valid. Under our Best Practices, any customer who cannot pay back their loan when it is due has the option of entering into an extended payment plan, allowing them to repay the loan over a period of additional weeks. This option is provided to customers for any reason and at no additional cost.

Furthermore, payday advance customers are educated, hard-working, middle-class Americans who face unbudgeted or unexpected expenses between paychecks, and want and need access to short-term credit. The claim that payday lenders don't consider borrowers' ability to repay is irrational. All reputable payday lenders have underwriting criteria, in addition to requirements of a steady income and checking account. State regulator reports show that more than 90 percent of payday advances are repaid when due.

Payday lenders are businesses, not charities. It would not make good business sense to loan money to people who can't pay you back.

Tommy Moore

Executive Vice President

Community Financial Services Association of America

Alexandria, Va.