Would you take out a short-term loan that carried an annual percentage rate (APR) of more than 400 percent? Many Missourians do, which is why a group of state lawmakers are seeking to change payday loan regulations.
“We need reform,” said state Rep. Mary Still, D-Columbia, who joined state Sen. Wes Shoemyer, D-Clarence, and state Rep. Rachel Bringer, D-Palmyra, in Hannibal last week for a payday loan reform hearing.
Still contends that the payday loan industry targets minorities and low-income groups.
“The whole industry depends on people not being able to pay back their loan,” she said. “We need to talk about it and educate the public about it.”
Still’s House Bill 1508, whose Senate companion is being sponsored by Sen. Joseph Keaveny, D-St. Louis, would:
• Limit the interest at a simple annual rate not to exceed 36 percent. The average interest rate now is $430.68 percent, according to the Missouri Division of Finance.
• Lenders would be required to give borrowers a minimum of 90 days to repay a loan.
“That will give working people a fighting chance,” said Still.
• Lenders would be prohibited from making a loan to a person who currently has a payday loan or from lending to a person within one week of that person paying or otherwise satisfying in full a payday loan.
• Enforcement of payday loan regulations would fall under the jurisdiction of the Missouri attorney general.
In addition to HB 1508, Still has introduced a second payday loan bill which would prevent payday loans of $500 or less from being available at nursing homes or any residential care, assisted living, intermediate care, or skilled nursing facilities.
Still said the additional bill was drafted with employees of those facilities in mind and not so much the residents. According to a report prepared by the Better Business Bureau, two allied groups headquartered in Sikeston which together operate over 90 nursing homes in Missouri “have regularly made loans to their employees at high interest rates, deducting the payback of the loans from the employees’ next paycheck.”
Still says the legislation would slow a drain on the state’s economy as a result of payday loans.
“Millions and millions of dollars are being siphoned out of our economy,” she said.
Still introduced a comparable bill last session, but it was never granted a hearing.
“We expected this would be more than a one-year process,” she said.
Jefferson City, MO —
