Payday Loan Times

The D.C. Council on Tuesday voted to sharply limit the practice of payday loans in the District.

Officials said the loans target poor and lower-income workers who can be stuck with interest rates as high a 300 percent if the loans are not paid back quickly.

Officials said that often borrowers are unable to repay their payday cash advances and must fork over additional fees. Typically, D.C. residents pay over $700 just to borrow $325.

The new measure would restrict interest rates and penalties on such loans and require more disclosure to borrowers.

The D.C. Council must vote on the legislation again this fall before it can go into effect.

Officials said that since 1998, the District has given faxless payday loan lenders special treatment - no other lender can charge more than 24 percent interest for a consumer loan.

Twelve states have eliminated payday loans, including Maryland. In North Carolina, most low-income residents said eliminating payday loans either was a good thing or had no impact on their lives.