Industry leaders, consumer advocates to meet about payday loans
June 9, 2006 - Wichita, Kansas
Critics of high-interest, short-term loans are seeking tighter restrictions on an industry they say is keeping poor people in a cycle of debt.
At least 64 businesses in Wichita offer payday loans, and opponents say that makes it too easy for people to get in over their heads.
"It is a major problem for some people," said Rep. Oletha Faust-Goudeau, who supports a limit on the total number of loans consumers can have.
Sunflower Community Action, a local grass roots group, is hosting a conference Saturday where it hopes to bring politicians, residents and city leaders together to discuss the issue.
Representatives of the payday loan industry, who say they often are the only option for people with bad credit, also plan to be at the meeting, the advocacy group says.
In addition to loan limits, Faust-Goudeau, D-Wichita, said Thursday a central database to keep tabs on the number of loans people take out would help regulators "help the customers help themselves."
"I think that would be a great start to addressing the issue," she said.
Under Kansas law, consumers can't have more than two outstanding loans with a lender -- including any branches of the same company -- or more than three in a 30-day period.
Rolling over a loan is illegal, but consumers are allowed to pay off a loan and get another one on the same visit.
To take out a payday loan, borrowers typically give the store a postdated personal check, which the lender holds for about two weeks or until a customer gets a paycheck. A borrower can either pay the loan off when it's due, let the lender deposit the check or take out another loan -- which critics say many people do.
Opponents of payday loans say high interest rates make it hard for poor families to get out of debt, especially when they use the loans to cover basic living expenses like utilities, rent or car payments.
The Wichita Eagle, AP Staff Writer
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- Interview with JJ Selmon, Community Organizer - LoanMax Protest [June 24, 2006] -
- Regulate payday loans [June 19, 2006]
- Industry leaders, consumer advocates to meet about payday loans [June 9, 2006]
- Protesters target local loan businesses [June 4, 2006]
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