Missouri Senate Approves Extended Payday Loan Requirement | Politics
The bill removes the cap of $ 75 per $ 100. Cunningham said it was because it was no longer needed due to the renewal ban and the extended payment plan. “The competition should dictate the costs,” he said.
Under current law, short-term loans can be rolled over or “rolled over” up to six times and interest can continue to accrue. Critics of the payday loan industry argue that these renewals trap low-income people in a cycle of debt and end up costing them too much in fees and interest.
The bill prohibits renewals or renewals of payday loans.
But Barbara Paulus, who heads the Economic Task Force for United Metropolitan Congregations in St. Louis, said the legislation does nothing to help those targeted by payday lenders. She said the rollover ban had done little in other states and consumers would still be able to take back-to-back loans.
“Even if they don’t call it a rollover, if you take out nine loans a year, it’s basically the same thing,” Paulus said.
Few consumers use extended repayment plans which are required by law, according to the Center for Responsible Lending. In Washington State, only 15% of eligible loans have been repaid under the extended plan mandated there. Paulus said payday lenders have an incentive not to trick people into using an extended plan.