PREDATORY LENDING PRACTICES

RAAUZYUW RUENAAA0300 1232305-UUUU–RUCRNAD.
ZNR UUUUU ZUI RUEWMCS1681 1232253
R 032305Z MAY 06
FM CNO WASHINGTON DC//N1NT//
TO NAVADMIN
INFO RHMFIUU/CNO WASHINGTON DC//N1NT//
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UNCLAS //N01740//
NAVADMIN 128/06
MSGID/GENADMIN/CNO WASHINGTON DC/N1NT/MAY//
SUBJ/PREDATORY LENDING PRACTICES//

GENTEXT/REMARKS/1. A SAILOR’S FINANCIAL READINESS DIRECTLY IMPACTS
UNIT READINESS AND THE NAVYS ABILITY TO ACCOMPLISH ITS MISSION. I
AM CONCERNED WITH THE NUMBER OF SAILORS WHO ARE TAKEN ADVANTAGE OF
BY PREDATORY LENDING PRACTICES, THE MOST COMMON OF WHICH IS THE
PAYDAY LOAN. OTHER PREDATORY-TYPE LOANS INCLUDE AUTOMOBILE TITLE
PAWN, TAX REFUND, AND RENT-TO-OWN FURNITURE. A RECENT SURVEY BY THE
DEFENSE MANPOWER DATA CENTER INDICATES THAT 13 PERCENT OF SAILORS
HAVE USED A PREDATORY LOAN IN THE PREVIOUS 12 MONTHS.
2. PREDATORY LOANS ARE USUALLY SMALL, SHORT-TERM ARRANGEMENTS
DESIGNED TO BRIDGE CASH-STRAPPED BORROWERS UNTIL THEIR NEXT
PAYCHECK. HOWEVER, THEY ARE EXPENSIVE, HIGH-INTEREST LOANS THAT
OFTEN COST 10-44 DOLLARS PER WEEK PER 100 DOLLARS BORROWED, PLUS
FEES. THE ANNUAL INTEREST RATE ROUTINELY EXCEEDS 1,000 PERCENT.
PREDATORY LOANS CAN FURTHER DEVASTATE A SAILORS PERSONAL FINANCES,
ESPECIALLY SINCE MANY OF THESE LOANS ARE NOT PAID AT THE ORIGINAL
PAYMENT DUE DATE AND ARE ROLLED-OVER TO THE NEXT PAYDAY. THE
ROLLOVERS ARE OF GREAT CONCERN SINCE MULTIPLE ROLLOVERS QUICKLY LEAD
TO A SITUATION WHERE MOST SAILORS CANNOT PAY OFF THE LOAN.
3. THERE ARE BETTER OPTIONS FOR SAILORS EXPERIENCING FINANCIAL
CHALLENGES. FOR EXAMPLE, PERSONAL FINANCIAL MANAGEMENT TRAINING AND
INFORMATION PROGRAMS ARE AVAILABLE FROM THE COMMAND FINANCIAL
SPECIALIST (CFS), THE LOCAL FLEET AND FAMILY SUPPORT CENTER, THROUGH
NAVY KNOWLEDGE ON-LINE (NKO), AND NAVY-MARINE CORPS RELIEF SOCIETY
(NMCRS). THEY EACH STAND READY TO EDUCATE AND GUIDE SAILORS AND
THEIR FAMILIES REGARDING PERSONAL FINANCES, INCLUDING ISSUES RELATED
TO PREDATORY LOAN USE. NAVY LEADERSHIP, AT ALL LEVELS, MUST
ENCOURAGE SAILORS TO SEEK LEGAL ASSISTANCE PRIOR TO SIGNING LOAN
DOCUMENTS OR OTHER FINANCIAL-RELATED CONTRACTS. WE MUST ENCOURAGE
OUR SHIPMATES WHO ARE USING PREDATORY LOANS TO STOP AND, WHEN
NECESSARY, SEEK IMMEDIATE ASSISTANCE FROM THE NAVY’S AVAILABLE
RESOURCES TO STABILIZE THEIR PERSONAL FINANCES.
4. EACH OF US HAS PROBABLY EXPERIENCED A FINANCIAL HARDSHIP AT ONE
TIME OR ANOTHER IN OUR LIVES. THERE IS NO SHAME IN DISCUSSING OR
SEEKING HELP FROM YOUR SHIPMATES AND LEADERS. IT IS BETTER TO ASK
FOR ASSISTANCE BEFORE SOME RELATIVELY MINOR FINANCIAL ISSUE BECOMES
A SERIOUS DIFFICULTY IN YOUR PERSONAL AND PROFESSIONAL LIFE.
ADDITIONALLY, WE MUST DISCUSS THE DANGERS AND AVAILABLE
ASSISTANCE/RESOURCES RELATED TO PREDATORY LOANS WITH OUR SPOUSES AND
OTHER FAMILY MEMBERS. INFORMATION ABOUT THE DANGERS AND
CONSEQUENCES OF SHORT-TERM, HIGH-INTEREST LOANS IS AVAILABLE AT
WWW.NKO.NAVY.MIL AND WWW.LIFELINES.NAVY.MIL WEBSITES.
5. TO THOSE OF YOU WHO ARE COMMAND FINANCIAL SPECIALISTS, YOUR WORK
IS ESSENTIAL. YOU ARE ON THE FRONT LINES IN THE BATTLE AGAINST
PREDATORY LOANS AND YOUR CONTINUED EFFORTS TO EDUCATE MEMBERS OF
YOUR COMMAND ON THIS ISSUE ARE CRITICAL TO ACHIEVE SUCCESS.
CONTINUED FOCUS ON PERSONAL FINANCIAL MANAGEMENT TRAINING, COMBINED
WITH SAILORS REGULARLY TAKING ADVANTAGE OF NAVY LEGAL SERVICE
OFFICE FREE LEGAL ASSISTANCE BEFORE SIGNING A LOAN AGREEMENT WILL
INHIBIT THE USE OF PREDATORY LOANS AND IMPROVE PERSONAL AND FAMILY
READINESS AS WELL AS MISSION READINESS.
6. RELEASED BY VADM J. C. HARVEY, JR., N1.//
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