Kentucky rate caps would end practices keeping some in debt
Wednesday, December 30, 2009 11:14 PM
Kentucky community interest groups are supporting state legislation that would cap the interest rates payday lenders are currently charging.Jennifer Belisle, the deputy director of the Northern Kentucky Community Action, recently went on record in support of Governor Beshear’s recentsupport of new laws for 2010 capping rates at 36 percent, the Public News Service recently reported.
Under the state’s current rules, payday lenders can charge exorbitant rates that can sometime charge upwards of 300 percent and allow numerous loans to be taken out at once, holding up some of their customers’ attempts to consolidate debt as they find themselves in worse financial trouble.
"People get caught in a debt trap and a debt cycle. They think they're borrowing several hundred dollars, for maybe two weeks or a month - and what happens is, it takes six, nine, 12 months or more to pay the debt off."
She added that Kentucky lenders had seen a substantial up tick in business ever since Ohio passed its own set of rules capping rates within the state, putting their lenders out of business and sending their former customers over the border to Kentucky lenders that can bilk them with their exorbitant rates.
In addition to Belisle, the Kentucky Coalition for Responsible Lending has also thrown its support behind rate caps in Kentucky.
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