Missouri is the most recent state to bring a bill to the House looking to tighten payday loan restrictions. The state currently caps payday loans at $500 and an individual must take out a loan for a 14-30 day period, and can renew the loan up to six times. The new bill, filed by Rep. Mary Still, would cap the APR at 36 percent. It would also allow a one time fee of $15 per $100 loan, but ban any renewals.
Those in favor of the bill use the typical excuse, saying the bill will protect people from “predatory lending”. Larry Weber, Missouri Catholic Conference Executive Director, said, “People are taking out loans who, there’s just not any reasonable likelihood that they’re going to be able to pay this in a reasonable amount of time.” It doesn’t sound like those people are being preyed upon,it sounds like they are taking out loans they can’t pay back.
Responsible lending is up to the lender. Responsible borrowing is up to the borrower. A payday loan is a short-term loan for those who can’t get a loan from a more traditional financial lender. Payday loan companies have higher rates because they take on a greater risk.
Capping these short-term rates would initially cripple payday loan companies, and ultimately push them out of business. Luckily, the Missouri House has faced similar bills in the past that have gotten nowhere. Hopefully, the House will recognize the need for payday loan companies and how they provide a needed service to a lot of people.
