High-interest payday loans in Kansas could be axed with new bill
TOPEKA, (KSNT) – Kansans who pay high interest rates for payday loans could see some changes with a new bill that is being introduced.
Reverend Annie Ricker, who leads Berryton United Methodist Church, is one of many members of a community activist organization called ‘Topeka Jump’ that is calling on lawmakers to push for payday loan reform this session .
“We are looking to do what other states have done successfully, to cap the interest on these payday loans, to make them always profitable for businesses, but also to make them affordable and unworkable for the people who take them out. “, said Ricker. .
Ricker said the bill that was introduced currently rests with the state financial institutions committee, chaired by Rep. Jim Kelly, R-Independence.
The proposal would cap the interest rate, which would limit the risk of rising interest rates for the borrower and allow the lender to earn a higher return when rates are low.
It would also create an installment plan for people to pay it back, so they don’t have to deal with what Ricker called “crushing” debt that can take “months” to resolve. She told the Kansas Capitol Bureau that she found herself in a similar position when she first moved to Hays and was fresh out of college.
“I had no established banking history in this community, and we had a repair vehicle, and the only lender we could find to lend us money was a payday lender,” Ricker said. “We took out less than a thousand dollars, but by the time we paid off the loan, we paid over three thousand dollars. It failed us and it cost us far more than necessary. »
Payday loans are short-term loans that often have high interest rates and an expectation that the borrower will begin repaying the loan on their next paycheck.
Critics of the loans called them “predatory”, pointing to low-income families.
Representatives of other organizations supporting the legislation, such as Rabbi Moti Rieber of Kansas Interfaith Action, KIFA, said the loans put already economically disadvantaged people “further behind”.
“It takes money out of the pockets of the hard-working poor,” Rieber said.
Ricker hopes lawmakers will act soon and debate it this year to help others in his congregations who are also struggling to repay those loans.