Thursday, February 01, 2007

Here's to looking out for the little guy!

In November 2005, new legislation was passed that was designed to regulate the payday loan industry in Michigan. The law goes into effect in June 2006, and requires all payday lending businesses to be licensed. Before this legislation was passed, there were no laws that declared the industry legal or illegal, and there were no laws that regulated how the industry operated. Under the new law, payday lending is declared legal, but regulations are placed on the business. Borrowers may borrow up to $600 in a one month period, but may not have more than one loan out at a time. Borrowers will have to pay interest rates at $15 per every hundred loaned in a two-week period. When annualized, this interest rate comes to 390%.

This is something that needs to be stopped. This is how the legislature steps in to protect people? You read that correctly. An eye-popping 390% interest is where the legislature capped it. This is abusive. And these things are everywhere. This is an issue for the church to take up for something to protest.

Go here to see the Governor's news release trumpeting this great accomplishment. Here is a little bit about this scourge's effect nationwide.


bishopman said...

Didn't they used to call this "loan-sharking"?

My question is this: If they are loaning money, should they not be regulated like other banks?

Rags said...

The only difference is that they don't compound the interest on your face.

I cannot believe this is the best deal the state could come up with.