Payday Loan Law
By: Wes Wallace
By: Wes Wallace
Cape Girardeau, MO -- It's a groundbreaking move, signing the payday loan reform into law. At least that's what Illinois Governor Rod Blagojevich calls his move on Thursday to protect consumers from predatory lenders.
The Payday Loan Reform Act limits the interest that can be charged for each loan to $15.50 per $100. It also sets a cap on total loan amounts to $1,000 or 25% of a customer's monthly salary. There's a whole other list of provisions the act covers says Blagojevich, "The new restrictions are designed to prevent pay day loan places from forcing people short of cash into a life time of debt."
So those in Illinois will have added protection when the law takes effect in 180 days, but what about others in the Heartland?
Short Term Solutions
"We offer short term financial help," explains Mindy Young, manager of Easy Money, "If you misuse them, then yeah we do get a bad wrap, but if you use them for the purposes they're intended for, it's a very good deal."
The two week loan usually comes with a small service fee, but Young explains there are plenty of warning signs and people quickly get into trouble with sky high interest rates, some as much as 391%!
"They draw it out and borrow to pay for one loan and then borrow again to pay for the second loan and so on and so on," says Young, "That's where people are running into trouble."
It's horror stories like those that often create a stigma with fast cash shops.
"I probably wouldn't ever use them," says Alaina Reddick, "I wouldn't borrow money that I knew I couldn't pay back or might not pay back if I miss the deadline and the interest kicks in."
Reddick's friend Blake Springs agrees, "I've had buddies who got them and got into trouble because they weren't paid off, plus I'm also afraid of the interest that will add up fast."