The Louisville Courier-Journal reports that Kentucky House Bill 182, which would have capped payday advances at 36 percent APR, has failed. The proposed payday lending legislation was voted down 13 to 10 in the Kentucky House Banking and Insurance Committee. Military loans remain limited to thirty-six % APR, per federal law.
Cash advance businesses won't die off
The payday loans bill was compared to meat by Louisville Democrat Rep. Darryl Owens that served as a sponsor of house Bill 182.
"It’s done. You can stick a fork in it," he said.
Despite numerous extant studies that illustrate that payday lending is much less costly than comparable alternatives and that a legitimate, non-exploitative market for the product exists, Rep. Owens and others cling to the belief that payday loan interest rates are "obscene.". When it comes to financial problems, only a few who get payday loans actually have difficulty. It was shown that defaults and rollovers are rare since most users have enough income to repay the loan.
Kentucky disagrees with Rep. Owens and business
John Rabenold said House Bill 182 would have been "a job killer." Rabenold is in the payday lending industry group Kentucky Deferred Deposit Association. An APR of thirty-six percent on payday advances would only generate a single dollar and change in profit for every $100 loaned. The payday loan business then has to pay for operational and salary expenses. That means most "profit" disappears entirely. The bulk of the roughly 650 payday lending outlets in the state would be forced to shut down, which would cost Kentucky as many as 2,000 jobs. That is something politicians might never be able to admit to having done.
The need for payday cash advance availability in Kentucky is there
Consumers whose access to traditional credit has been restricted due to credit history will inevitably experience financial shocks from time to time, particularly when emergency expenditures arise. From medical bills to automobile repairs, the need for quick money from payday advances exists. Kentucky families might have a hard time during emergencies without access to the money which was a main concern of Democratic Rep. Jim Gooch, reports the Courier-Journal.
Articles cited
Louisville Courier Journal
courier-journal.com/article/20110216/NEWS01/302160106/1010/FEATURES/House-panel-rejects-payday-loan-bill?odyssey=nav%7Chead
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