Missouri legislators have introduced two bills that would safeguard consumers against payday loans by limiting the interest rates. As explained in "Payday loans -- High demand, high interest," by Bob Miller of the Southeast Missourian:
A bill proposed by state Rep. John Burnett, also of Kansas City, would limit the interest and other charges to a total of $15 per $100 of principal for the first 31 days of the loan and interest of not more than 3 percent per month thereafter. The bill repeals language that permits lenders to issue a new loan to pay off the original loan, which allows the lender once again to charge 75 percent interest.Employees of payday loan businesses, some of whom spoke only on the condition of anonymity, said the 3 percent language would completely eliminate loan renewals and their customers' choices.
Burnett said he doesn't expect the 3 percent number to stick as the bill moves along. He has been promised a hearing on the matter at the committee level.
[Rep. Vicki Walker of Kansas City] said she has seen the number of payday loan stores increase in the Kansas City area. There are seven in one particular strip mall.
"If we can annoy the heck out of them, hopefully they'll stop," she said. "They go to marginal neighborhoods, and in these economic times it could be the push that sends a marginal neighborhood the wrong way."
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