Payday Lenders' Bites Are Worse Than a Shark's

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Unlike payday lenders, a shark will at least show you his teeth. Most people don't realize that in Kentucky, payday loan interest rates are at least 391%, and often over 400%. Ouch. That's quite a bite.

Over 40% of borrowers think the rates are less than 30% APR, which would be comparable to a credit card cash advance.

Gov. Steve Beshear supports HB 381, introduced by Rep. Darryl Owens, joined by co-sponsors and Kentucky Coalition for Responsible Lending (KCRL), which would make Kentucky the 16th state to cap interest rates on these so-called short-term loans at 36%. (Note: The District of Columbia has also capped the interest rates on these loans.)

Why do I say “so-called short-term loans?” Because nationwide, 9 out of 10 of these loans are made to repeat borrowers, who average about 9-10 loans annually.

"We believe this is a needed step to protect Kentucky consumers from a predatory product that costs hard working families approximately $150 million a year," said Kip Bowmar, Executive Director of Community Action Kentucky and KCRL member organization. "We salute Rep. Owens and the 19 co-sponsors on this important legislation," added Bowmar.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Sherry Deatrick | Attorney Advertising

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