Nov 12, 2013 at 5:15 am
ST. PAUL, Minn. - The Minnesota Legislature won't convene until February, but there's already action in St. Paul and the focus today is on payday lending. A new report on such loans in Minnesota will be discussed and brought to the offices of legislators. The analysis shows the number of payday loans made in the state has more than doubled over the past five years to 370,000.
Brian Rusche, executive director of the Joint Religious Legislative Coalition, pointed out that those using such lenders often are the most vulnerable.
"This industry has exploded," he declared. "It is popping up in neighborhoods and towns across Minnesota and it is extracting a lot of income from people who find themselves in desperate circumstances."
Rusche said they'll propose legislation to close the loophole that allows the largest payday lenders in the state to charge over-the-top interest rates. The bill would also cap the number of loans a payday lender could make to one person in one year.
Payday lenders say they fill a service for those who don't quality for conventional loans or just have a cash emergency. Rusche said that such instances may be OK, but research shows that 70 percent of payday loans go to repeat customers.
"Most people go to payday lenders to pay regular expenses like rent and utilities and they go repeatedly," he said. "And pretty soon you're paying an annual interest rate of well over 400 percent on money that you keep rolling over to the next paycheck and to the next paycheck and to the next paycheck."
A meeting on the issues and solutions with payday lending is set for Thursday at Holy Trinity Lutheran Church in south Minneapolis. Holy Trinity has five payday lenders within a half-mile radius and is considering plans for a type of community loan fund to help those in need in emergencies.
Temp: 31°F (-1°C)
Wind: 13 SW