State Payday Lenders Must Be Curbed | Staff editorials
When people turn to a payday loan business for cash, it is probably because they have no other way to borrow money and they need the money now.
They agree to pay the exorbitant interest rate imposed by the lender. Currently, the interest rates for payday loans in Nebraska are on average over 400%.
This benefits those who can least afford to pay. But they have medical bills, car repairs, utility bills, or other expenses that need to be paid immediately, so they agree to pay the interest when they sign up with the payday lender. Then if they can’t pay it off in a month, they’ll have to borrow more money again. It’s a vicious circle.
The fact that Nebraska has no limits on payday lender interest rates is probably the reason there are so many payday lenders on Grand Island and across the state. The state’s only restriction is that their fees cannot exceed $ 15 for every $ 100 loaned, with a maximum loan of $ 500.
But the Nov. 3 ballot features Initiative 428, the Payday Lender Interest Rate Cap Initiative, which would limit the annual interest charged by payday lenders to 36%. No fee could be charged that would bring the total annual cost to more than 36%.
That’s still more than almost all of the fees charged by credit card issuers, but it would be a big improvement.