The Missouri House Financial Institutions Committee is ready to listen to two brand new bills that could affect pay day loans in the state, states the Columbia Daily Tribune. Committee chair Rep. Don Wells (R-Cabool), who’s the previous owner of a payday loans company, will hear personal unsecured loan bills by Rep. Mary Still (D-Columbia) and Rep. Ellen Brandom (R-Sikeston) at 5 p.m. Wed at the Jefferson City Capitol Building. While Rep. Still’s HB 132 calls for drastic limits to state payday lenders, Rep. Brandom’s HB 656 takes a more moderate approach.
Saying it is ‘Consumer protections without killing the personal loans industry’
Any Missouri Congress legislation on payday loan should be able to add "consumer protections without killing the industry," Rep. Wells suggested to the Daily Tribune. His ideas are more similar in shape to those in Rep. Brandom’s Missouri HB 656, in that he supports limiting the number of payday loan renewals Missouri customers can arrange; having at least a two-week "cool off" period; making sure the fee per $100 borrowed on a personal loan is clearly posted for consumer consideration as a dollar amount, instead of a percentage; and allowing customers to make long-term repayment arrangements without excessive penalty.
The average cash advance in Missouri is pretty cheap, said Brandom. For every $100 borrowed, about $17 is paid.
"To me, that is the easiest way to understand it," she said.
36 percent Annual Percentage Rate barrier the problem with Missouri HB 132 bill
A different approach to personal loans was taken by Rep. Nevertheless. The payday loan costs would be limited by 5 percent with her bill. There would be a $25 total limit. Even if the repayment period is over 90 days, there would not be more than a 36 percent Annual Percentage Rate allowed. The FDIC does not understand the business very well and can't make that decision since studies keep showing a 36 percent APR is not sustainable for a business.
"You can make money at 36 percent," she said. "Some companies offer money at 18 percent. It is what the FDIC says is a reasonable rate."
Rep. Still's goal isn't being followed with the idea of driving pay day loan companies out of business in Missouri making it so customers have to discover other sources. There hasn't even been a necessity for a 36 percent Annual Percentage Rate in the Missouri Catholic Conference which has submitted a different payday lending model.
Personal loan company in Missouri claims it won't continue business
QC Holdings, the largest payday lender in Missouri, cannot operate with this restriction which would also end up losing all smaller loan providers with a 36 percent Annual Percentage Rate cap. QC Holdings said in a 2009 Missouri Better Business Bureau report:
“Any federal law that would impose a national 36 percent APR limit on our services … would likely eliminate our ability to continue our current operations."
Citations
Better Business Bureau
stlouis.bbb.org/Storage/142/Documents/PaydayLoanReport09color.pdf
Columbia Daily Tribune
columbiatribune.com/news/2011/mar/08/payday-loan-bills-on-tap/
>Apply some reason when thinking about payday loans
youtube.com/watch?v=dKTIJ5Xmb8w
No comments:
Post a Comment