Payday Loan Writer
Members of the Missouri General Assembly have introduced bills to further regulate the growing guaranteed payday loan industry in the state, but controversy still surrounds the movement to standardize these businesses.
Missouri is home to 1,644 payday loan stores that charge an average annual percentage rate (APR) of 422 percent for short-term cash loans, according to a March 11 Columbia Daily Tribune article. New legislation would cap this annual rate at 36 percent, a move that would essentially eliminate payday loans in the state, according to the article.
Tony Garrett, manager of the Kirksville Advance America Cash Advance, said his company serves 150 to 200 customers at any given time. He said that despite the current payday loan debate, he thinks his business addresses a consumer need.
“I think we’re here for a reason, and I think that some people abuse that privilege,” Garrett said. “[But] there are some people that know the system and use it to the best of their abilities.”
He said his customers use bad credit payday loans to pay for unexpected expenses like car repairs, travel and past-due bills.
“Sometimes you need money and don’t have the cash for it right then, and if you go [to a bank], it could take you two to three days to get a loan,” Garrett said. “With us, it’s a same-day process.”
“I wouldn’t have been able to give my son a Christmas”
An Advance America Cash Advance customer who asked to remain anonymous said she used payday loans to make ends meet while raising her 3-year-old son. A single mother, employee and full-time student at Moberly Area Community College, she said she turned to cash advance online loans to afford car payments,gas, rent and groceries.
“In order to stay afloat, I had to [take out a payday loan],” she said. “I didn’t want to, but I had to.”
She said the high interest on payday loans is problematic, but the loans allowed her to pay for things she couldn’t afford otherwise.
“I’m glad they’re there or else I wouldn’t have been able to give my son a Christmas,” she said. “I don’t think they’d actually have these places if people didn’t need help.”
Steve Smith, professor of economics and business law, said the number of payday loan companies indicates a demand for their services. But he said opposition to quick payday advance operations arises because of high interest rates and the idea that the industry is “making a killing.”
“Frankly, also I think another reason you get opposition to payday loan places is because it’s good theater for a politician,” Smith said. “… There’s nothing better for a politician than to be able to pose - this is a somewhat cynical view, perhaps �- but to be able to pose as the protector of the little guy against big bad business.”
Smith said that although new legislation might help many individuals, it might also prevent some from getting the fast cash loan they need.
“You’re protecting them by basically taking an option away from them, and I don’t see why that is so great,” he said. “Another thing that can happen is if people are really desperate for money, they’ll get a loan anyway even if you pass those caps, but they’ll get it from an illegal lender.”
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