HELENA – Consumer advocates say payday loans need stricter regulation, arguing new legislation is needed for the industry.
House Bill 396 is aimed at both payday and title loans. Rep. Bill Wilson of Great Falls said Monday he wants to cap interest rates at an annual percentage rate of 36 percent.
Wilson says the industry charges effective rates of over 700 percent on the short-term loans. The Democrat says the industry thrives by victimizing repeat customers.
The industry says it doesn’t charge interest rates, but instead charges a fee for the service. The business owners say they would not be able to survive under the proposal.
They argued an annualized interest rate cap of 36 percent is just a few dollars on a typical two-week payday loan — not nearly enough to make the business work.