Rep. Lynn Morris says his bill attempting to cap the interest rates charged by payday lenders will have to wait until next year.
Morris, a Republican from Ozark, spoke in Springfield Friday a week before lawmakers end this year’s legislative session. His bill would place a cap of 36 percent on what payday and title loaners can charge customers.
“It’s going to take more than a year to pass this bill, but what I promise to you all is I will make this one of my priorities.”
About two dozen people attended Friday’s event at University Baptist Heights Church, sponsored by Faith Voices of Southwest Missouri. It aimed to shed light on the challenges payday lending can have on customers.
Kathy Lutz ended up taking out four such loans after severe health complications arose several years ago. The one word she used to describe her experience was “hopeless.”
“Once you get piled in, there’s virtually no way to get out. Unless you win a big lottery, you’re kind of trapped in the dead cycle, and it just seems to spiral in and get worse and worse and never better.”
She said one loan for $934 ended up costing her over $1,515 in interest alone, an annual rate of 155 percent.
“So you can see how it becomes impossible. You wake up just paying the interest and never being able to pay on the principle, so it goes on and on and on, sometimes for years.”
Lutz and her husband were able to finally pay of their debts, thanks to efforts by members at The Fairbanks and City Utilities Community Credit Union. In 2015, CU launched the Fresh Start Loan Program to help people that may fall victim high to interest, short-term loans.
Morris said he intends to pre-file his bill in December, ahead of the 2018 legislative session, and get it out on the House floor as soon as possible.
The bill, which he says has opponents in the banking industry, needs supporters in every district of the state.
“You’re going to have to make sure that every representative and every senator understands the importance and the magnitude of this bill in this situation.”
Across Missouri, average interest rates for predatory loans are at 450 percent, and that rate can legally climb up to 1,950 percent.
With this in mind, Lutz says she cautions everyone to stay away from payday lending, and find other legal means to pay off debts, even asking friends and relatives. She says it’s time for lawmakers to do something about this issue.
“Our government passes laws all the time, to protect us, sometimes even from ourselves…why don’t we have legislation that protects us from predatory loans?”
Introduced in late February, Missouri House Bill 1105 was referred to the Financial Institutions committee a month later. It did not receive a committee hearing.