There will be another attempt to pass a payday loan bill during next year’s legislative session in Jefferson City. State Representative Charlie Davis, R-Webb City, plans to re-file a proposal he submitted earlier this year but did not receive a hearing. This would put limits on how often a payday loan renews and how much money a person is allowed to withdraw at one time.
The goal is to protect consumers, without having a devastating impact on the short-term lending industry, according to Davis.
“The last thing I want to do is bankrupt payday loans,” he said. “They do a great job at the things they were originally meant to do. It’s just sometimes that we have individuals making really bad decisions.”
Many companies that offer quick access to cash have come under scrutiny in terms of loan terms. Agreements can include much higher interest rates than traditional banks and can be renewed in a way that could allow interest and fees to accumulate. Many people in low-income areas initially find payday loans attractive because they need money to cover some bills and may not have access to banks. But in many cases, the terms of the loans make it difficult to repay the money.
Interest rates have been central to the concerns of groups calling for more regulation.
The limit on a two week loan in Missouri can be as high as 75%. St. Louis 20th Ward Alderman, Cara Spencer, recently told St. Louis Public Radio that the rate was lower in surrounding states. She is the executive director of the Missouri Consumers Council and spearheaded support for Proposition S, which was passed by city voters earlier this year. It sets certain regulations for payday loan operators, including inviting them to provide information on alternatives to short-term loans.
Davis doesn’t see interest rates as a big deal.
A loan lasting a few weeks is usually repaid at maturity, he said. But he wants to do more to help people who find themselves in circumstances where they cannot pay the money back on time.
“The next thing you know is they have five or six loans,” he said. “And over the course of the payment process, they could spend $ 30,000 to $ 40,000 on a $ 5,000 loan.”
Davis said it was too early to know if the bill will be approved in Jefferson City next year.
He said the proposal sparked conversations between lawmakers, payday loan companies and consumer advocates that could potentially push everyone to strike a balance between regulations to protect customers and ensure those rules don’t. do not force short-term loan companies to close their doors.
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