A legislator from Iowa City is pushing for a state law that’d limit the interest rates payday or “fast cash” loan joints can charge. Senator Joel Bolkcom says today, interest rates are topping 300 percent — and range as high as 459 percent for a 50-dollar, 14-day loan. Bolkcom says it’s an important form of consumer credit for working families trying to make it from paycheck to paycheck, but he says the interest rates are “outrageous and exorbitant” and should be reduced by law — to 150 percent. There are 150 short-term loan shops in Iowa which offer 14-day loans to folks who can provide a paycheck stub and a pre-dated check to cover the loan. Bolkcom says those businesses made 22-thousand loans in Iowa last year, and many of the consumers who borrowed the money are in what Bolkcom describes as a “debt treadmill” as they borrow to pay off their previous loan.Bolkcom says 42 percent of those who use the short-term loan companies in Iowa are taking out one loan per month, and about a fifth took out 20 or more loans per year, Bolkcom says the businesses are “predatory lenders” and he’ll offer legislation that’d not only limit interest charges to 150 percent, but also require the lenders to give customers information about their fees and interest rates they can take home and study. Current law limits such short-term loans to a maximum of 500 dollars. Bolkcom proposes lowering that limit to 300 dollars.
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