Interest Rate Caps: To Advocates, a Solution, To Lenders, a Disaster

San Francisco Mission Local  
December 10, 2009
Huber, Bridget

Check cashers and payday lenders in California are exempt from the California Finance Lenders law that restricts interest on small loans to 28 percent, allowing them to charge annual rates of more than 400 percent. Ivan Barriga of the Mission SF Federal Credit Union in San Francisco says, "If people, when they go to buy a car or a house here were to get an interest rate of, say, 40 percent, there would probably be protests in the street. And here we have some of the neediest people in the city, paying over 400 percent, and these companies are getting away with it." Consumer advocates believe the only way to protect consumers is for lawmakers to implement an interest rate cap; payday lending already is banned outright or interest rates are capped at about 36 percent in 14 states.

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