JEFFERSON CITY, Mo. (AP) — Critics are challenging a proposed Missouri ballot measure that seeks to limit interest rates for payday loans.

The proposed ballot measure would cap interest, fees and charges for payday and car title loans at 36 percent per year. Critics of the proposal filed a lawsuit in the state Capitol’s home of Cole County.

The suit contends a ballot summary for the proposal is inadequate and unfair and that the cost estimate for the proposal does not address all the possible costs.

Backers of the ballot measure say they plan to start collecting signatures for the initiative petition this week. To get the measure on the 2012 ballot, they must collect signatures from 5 percent of the voters who cast ballots in the 2008 governor’s election from six congressional districts.

Copyright Associated Press


Comments (6)
  1. LH7953 says:

    I work in the industry and there are efforts to cap the annual interest rates on payday loans at 36% APR. While this sounds reasonable, payday loans are two-week loans and cannot be offered at the same APRs as annual credit products.

    An annual interest rate cap of 36% would result in the elimination of an affordable credit choice for consumers. At a 36% APR, the total fee charged on a $100, two-week advance would be $1.38. Payday advance lenders could not cover the cost of originating a loan, let alone meeting employee payroll and benefits and other fixed business expenses.

  2. EH12648 says:

    I too work in the industry, and as LH7953 mentioned, at 36% APR the interest rate would be so low, most Payday lending facilities would have to close their doors. While this may please some, consider the sate of the economy and the record setting unemployment rates in the country.

    Then consider, the payday lending industry supports over 155,000 jobs nationally, including 77,088 people directly employed in 23,586 storefront locations. The industry indirectly created another 28,453 jobs in supplier industries. Payday loan store and supplier industry employees induced the creation of 50,039 jobs through the purchase of goods and services using earned wages.

  3. SupMar says:

    Payday advances are typically two weeks, not annual loans. For each $100 advanced, customers pay a typical fee of $15-$17.

    Because payday loans are two-week loans they cannot be offered at the same annual rates as annual credit products such as credit cards, auto loans, and home mortgages.

    I work in the industry and the only way to reach the “much-hyped” triple digit APR is to take out one advance and continue to renew the same advance every two weeks for an entire year. State law and industry best practices do not allow this to happen.

  4. jefft1 says:

    I work in the industry and capping the interest rate at 36% would not cover the cost to operate our business. Removing one option in today’s environment will only force consumers into more expensive, less desirable and unregulated alternatives. Adults should be given information and be allowed to make a decision about what financial products work best fro their families and their individual situations.

  5. AverageJane says:

    People are perfectlycapable of making their own decisions. They also deserve to have options for those times when they are in a financial crunch. Putting a 36% APR cap on payday loans would close all payday lending businesses & put hundreds of people out of work.

  6. Shinsen1378 says:

    I am also in the payday loan business. As others have stated already, a 36% cap is actually an elimination of this business model. Customers deserve choices and do not want others making financial choices for them. Taking away choices does not help consumers. Research shows consumers are harmed when payday lending is no longer an option.

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