A Soldiers Guide to Military Advance Payday Loans

James, a young U.S. Navy Petty Officer assigned to a destroyer in the Pacific Fleet, Hector, a newly commissioned Lieutenant in the United States Marine Corps, Paris Island, South Carolina , Armando, Airman 1st Class, a member of the “Hurricane Hunters” stationed at Keesler Air Force Base, Biloxi, Mississippi, and Samantha, private first class of Fort Sam Houston, Texas have a lot more in common than their military service. They are in the payday loan cycle. At some point they each found themselves short on cash, and like thousands of their peers, they sought relief through one of the myriad of cash advance businesses that flock like locusts to areas near military facilities. Each time the “loans” came due, each found themselves in the same position that drew them to these predatory lenders to begin with, so they took out another - then another - etc.

Although the above named individuals are fictional, the stories are true and repeated hundreds of times daily. It is a problem so huge that it has caught the attention of commanders, state and national legislators, and even the intense interest of Homeland Security. After all, a soldier in over his head can become a security risk. Deep financial problems could, in some eyes, lead to desperation so severe that one could be a prime target of our enemies.

Every soldier should be aware of the problems they could become faced with if they decide to use the services of a payday lender. The payday lending business model is designed to cultivate repeat borrowers, to suck you in to their cycle. It is estimated by the Center for Responsible Lending that American families are being charged over five and a half billion dollars in excess fees by these companies.

According to officials at the Army Emergency Relief center of Fort Bliss, Texas, an estimated ten percent of the active duty personnel stationed there have required financial counseling because of payday loans and other debt problems. No mystery there, if you are feeding your pay check to the payday loan companies, you will no doubt start missing payments to other creditors. Military personnel are great targets for the payday loan companies. They have a steady income and with sudden deployment, often face financial difficulties at home. At least one fourth of military families have been caught up in the problems of payday lending, according to analyses by the New York Times.

“Payday loans are supposed to help working people cover unexpected costs and emergencies, they’re not supposed to break their bank accounts. We needed to do something about this, and we have achieved it” said Illinois Governor Rod O. Blagojevich when he signed the landmark Payday Loan Reform Act into law 9 Jun 2005. “We can now protect working families from abusive lenders, very high interest rates, and endless debt. This law also helps members of the military. Lenders are no longer able to garnish their pay, collect when a member of the armed forces is in a combat zone, or contact their commanding officer.”

Before you take out a payday loan, make every effort to find alternative resources for your needs. There are a number of loan companies who make conventional loans available to military personnel, and take into account the effect that frequent re-assignment and relocation can have on your FICO scores.