Kansas To Look At Payday Loans

On this blog, I have on several times railed against the PayDay loan businesses. Last year a Democratic member of the Kansas Legislature introduced two bills that went no where. I even attended a rally in support of such legislation. Well, this year, it is the Republicans leading the charge.


TOPEKA - The rapid growth in the number of payday lending businesses in Kansas has caught the attention of Rep. Clark Shultz, R-Lindsborg. Shultz is the chairman of the House Financial Institutions Committee. His new bill to be introduced next week, will be aimed at limiting such business transactions to better protect area consumers.

Shultz said he's concerned about consecutive loans people are obtaining at several lending businesses.
- Hutchinson News

Currently Kansas law allows no more then two (2) payday loans of $500 or less during a 30-day period. The Payday loan stores charge customers $15 for each $100 borrowed. Making that two-week loan of $500 cost the borrower $75. Put another way, that figures out to be an annual percentage rate of 391%.

Shultz said he wants to prevent people from getting into a debt cycle of principal and interest fees that they can never pay off. This idea is based upon the fact that many customers of these places end up borrowing again and again to pay off the previous loan. In the process digging their selves deeper and deeper into debt as the fees ("interest") charges continue to mount and with in a few weeks are as much as the loan itself.

"I'm not saying it's all bad and I'm not in support of useless regulation. If there's an emergency and someone's car breaks down, I can see the need," he said. "I just don't want people taken advantage of. It's easy in today's society to find yourself in trouble."
- Hutchinson News

Last year Rep. Melody McCray-Miller, D-Wichita, tried unsuccessfully to get legislation passed to help better regulate this industry. Perhaps this year will be different with Republicans in the heavily controlled Republican legislature leading the charge on this. I will certainly be following this as the legislative session (Jan-April) moves forward.

Rep. Shultz, said that this new version would be a committee bill and would not have any sponsors or co-sponsors. When asked what he thought the chances of the bills passage, considering the failure last year, he gave the bill a 50/50 chance.

Attempts to contact Rep. McCray-Miller for comments on this article were unsuccessful.


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