A key part of Springfield City Council’s rules designed to crack down on payday lenders and car title lenders will soon be law.
More than 56% of voters on Tuesday backed a proposal to impose an annual fee of $ 5,000 on short-term lenders, or a fee of $ 2,500 if they register mid-year.
The measure aims to ensure that lenders comply with city rules, and the money will be used to provide alternatives to short-term lenders, help people get out of debt, and educate the community on the reality of taking out a mortgage. payday loan or car title. .
Lawyers say that while the vote was a victory, local fees and regulations are only the first steps in regulating “predatory” loans. Only the state can cap interest rates on loans, which average 450% statewide.
“We are incredibly pleased that city boundary voters see the importance of continuing this first step towards reform,” said Susan Schmalzbauer, organizer of Faith Voices of Southwest Missouri. “But really, it’s a message to Jefferson City that we need a rate cap because we know it’s the best reform.”
St. Louis, Kansas City, and Liberty, Missouri, also have similar regulations in place to require disclosure and registration of lending institutions.
It took Springfield over two years to pass its own rules.
Some council members initially opposed the regulation, saying they didn’t think local rules and fees could do much to reduce the problems that lead people to apply for a payday loan or rates. interest rates that trap people in a cycle of debt.
But after a task force studied and supported local regulations, as well as state-level interest rate caps, the council unanimously approved it.
“The only real solution is probably state-level interest rate legislation,” Mayor Ken McClure said at a council meeting in May. “I join my colleagues in urging the General Assembly to take appropriate action on this matter.”
Katie Kull covers local government for the News-Leader. Got a story to tell? Call her at 417-408-1025 or email her at [email protected] You can also support local journalism on News-Leader.com/subscribe.