Extend 'Payday Loan' Protections to All Borrowers

Like payday loans, car-title loans are marketed as small emergency loans. A typical car title loan has a triple-digit annual interest rate, requires repayment within one month, and is usually made for much less than the value of the car. In a title loan transaction, you keep your car, and the lender keeps the title as security for repayment of the loan. If a borrower fails to repay the loan, he runs the risk of losing his car.

The payday lending industry characterizes the small, short-term loans it offers as a financial taxi to help people get from one paycheck to another when faced with an unexpected need for cash.

Payday loans are cheaper than bouncing a check or paying a late fee on a credit card, said Darrin Andersen, who is president of QC Holdings, a payday lender, and president of the Community Financial Services Association of America, which represents more than half of the estimated 22,000 payday advance industry outlets.

Most payday customers use the service about six or seven times a year, Andersen said. His company and others are filling a need, he added.

It may be that payday loans are in demand, but you can't base the demand for this type of business on the satisfaction of cash-strapped, desperate individuals.

And to say that getting a payday loan is better than bouncing a check is like saying it is better to smoke one cigarette a day than two. Both are bad for you.

Helping the military steer clear of predatory, high-priced debt is a good thing. It would be even better if the legislation were expanded to include all consumers.

· On the air: Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and online athttp://www.npr.org.

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