Payday Loan – Groups target payday loan rates
Members of the Coalition for Responsible Lending said at a news conference Monday in Louisville that they want lawmakers in the 2010 legislative session to cap at 36 percent the annual interest on cash advance loans — the same rate Congress imposed in 2007 on payday loans for military personnel.
Apart from loans to military personnel, payday lenders in Kentucky may charge up to $15 per $100 dollars borrowed — or $75 for the maximum $500, two-week loan — which adds up to an annual interest rate of more than 400 percent, coalition members said Monday.
Because consumers often can’t pay off the loans, they frequently take out another one to pay off the previous one, a practice critics call “churning”’ that results in higher profits for lenders, said Amy Shir, chairwoman of coalition.
But Lindsey Medsker, a spokeswoman for Community Financial Services Association of America, said the industry group opposes the proposed cap because it would effectively eliminate payday lending in Kentucky.
source here.
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