Missouri's City Council in Springfield is taking steps to approve new payday loan regulations.
For Immediate Release – United States – July 25, 2019
After local groups rallied for changes to payday loan regulations, Missouri legislators are proposing new laws to meet the demands of their constituency. The suggested proposals would require payday loan lenders to adhere to additional regulations, and this could potentially affect the availability of these loans.
1FirstCashAdvance wants to keep consumers up to date on this issue as well as any other industry changes.
Although payday loans tend to have high-interest rates, Missouri’s permissive laws allow for even higher rates. Local borrowers end up paying an average yearly interest rate of over 450 percent. Those high rates leave many borrowers financially stressed as they simply end up borrowing more money to cover the cost of accumulated interest and other debts. Critics of the Missouri payday loans argue that lenders are offering terms that contribute to local poverty and homelessness, and leave many borrowers trapped in debt.
In response, Springfield City Council is considering two versions of a proposal to alter regulations surrounding the payday loan industry.
Under the original proposal, loan services would have to pay a $5,000 annual license fee and receive a permit to operate from the city government.
Under both versions, loans would be subject to background checks, and lenders would have to clarify the interest rates they are charging the consumers.
In addition, loan services would be required to inform and educate potential borrowers on alternatives to payday loans.
These steps would ensure that borrowers are aware of the risks of payday loans and help them understand that in many cases, those risks are avoidable. For example, borrowers could turn to personal loans from a local financial institution instead of relying on a high-interest payday loan.
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