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Next Thursday, June 2, the Consumer Protection Financial Bureau will host a public hearing and panel discussion on the topic of payday loans. The event includes remarks from the Bureau’s Director Richard Cordray, a roundtable of consumer advocates and representatives from the payday loan industry as well as public testimony.
In a lead up to the conference, the Kansas City Star featured the story of Elliott Clark who took out $2,500 worth of payday loans to help with medical bills for his wife. The loans turned into $50,000 worth of interest payments and fees.
A short term loan of $500 or less does not seem too bad, until one gets to the fine print. Without caps on interest rates, the average interest for a loan in Missouri is 455%... yes you read that correctly. This creates a cycle of taking out more loans to pay off interest and the spiral continues, forcing people to sell their homes and dive further into poverty.
Think that someone should know these risks when taking a loan? Well the same people who are in tough times are same people who cannot call an attorney to understand the legal components. And in the words of Mr. Clark,
“Oh, I’ve been called stupid, and they say I should have read the fine print,” Clark said. “But they’ve not walked in my shoes. What choice did I have? I needed money.”
Progress Missouri will continue to monitor the payday loan shark industry. For more information, read this 2015 Report on how payday loan money flows through through Missouri politics to prevent any kind of common sense reform.