Faith Groups Urge Stricter Rules on Payday Loans

November 12, 2013
Minneapolis Star Tribune 
payday lending news

The Joint Religious Legislative Coalition has released a report calling for a broad new crackdown on payday lending in Minnesota, arguing that current limits on the industry are inadequate. According to the interfaith group, the number of payday loans statewide has more than doubled over five years, reaching 371,000 in 2012. The average payday borrower in Minnesota took out 10 loans a year, often spending more on interest than what they initially borrowed. The coalition represents the Minnesota Catholic Conference, Minnesota Council of Churches, Islamic Center of Minnesota, and the Jewish Community Relations Council of Minnesota and the Dakotas. Research came from the St. Paul-based Legal Services Advocacy Project and Pew Charitable Trusts.

The coalition recommends limiting the number of short-term loans a person can obtain in a year and closing a loophole that lets lenders dodge rules by registering as an Industrial Loan and Thrift. It also asks that payday lenders be compelled to verify a borrower’s ability to repay and to ask whether they or family are military members and therefore subject to a 36 percent interest cap. The number of payday loans in Minnesota may be even higher than estimated, since the report includes neither loans made by online lenders not registered in Minnesota nor payday loan-like deposit advances that some banks offer.

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