Many Missourians facing hardship turn to short-term loans to help them meet their financial needs until their next paycheck arrives. Payday loans must often be repaid in 14 days and they come at a price.
A state House committee is considering whether to restrict payday loan fees and interest at 35% of the amount of the loan – a reduction from the current 75% threshold. State Rep. Steve Helms, R-Springfield, is sponsoring a bill that he hopes addresses what he says are the most egregious issues of such lending practices.
“I’m trying to strike a balance where you can keep the industry there viable and moving forward because guess what – folks that have bad employment and bad credit, they need somewhere to get these loans,” Helms says.
The bill would not go as far as capping interest rates themselves – rates that Mark Rhoads, an industry lobbyist, says average 400% annually.
“We have always argued that an APR, an annual percentage rate, on a 14-day loan, is just not an appropriate way to look at interest rates,” Rhoads says.
Rep. Rory Rowland, D-Independence, says changes to such loan practices are overdue.
“For us to have not taken action for many, many years. To be 2018 and not take action, I think is just reprehensible,” Rowland says.
He says the industry has a black eye.
“We’re dealing with clientele that has tremendous debt loads, or problems and things like that. I cannot, in good conscience, say that it’s not predatory lending when we’re talking about 400% interest. I just can’t in good conscience look myself in the eye, when I look in the mirror, and say that this is okay,” Rowland says.
Industry representatives are reviewing new changes made to the bill and have not taken a public position on the legislation.
The measure would also:
*Change the number of times a borrower could renew a loan from the current six times down to two
*Reduce the annual licensing fees from the current $500 down to $300 per payday lending location
*Allow an extended payment plan to be used by some borrowers