Posted: Sep 1, 2010 4:38 PM by Irina Cates
Updated: Oct 22, 2010 6:01 PM
MISSOULA - An initiative to cap payday loan rates is on the ballot for the first time in Montana's history as over 27,000 voter signatures were collected to put I-164 on the election ballot.
Supporters of the initiative kicked off the campaign to make sure the measure passes in November on Wednesday in Missoula.
The average annual interest rate on a payday loan is 400% and I-164 would cap the rate at 36% and would protect seniors and working families from predatory loans.
"Passing this ballot initiative to cap the interest rate, on payday and car title loans, will strengthen the economy. The majority of these businesses are owned by out of state companies. They collect millions of dollars in fees from Montana working families every year," says Liz Stoeckel, the Fund Development Coordinator at HomeWORD.
The Center for Responsible Lending reports that 90% of the payday lending industry's business is generated from trapped borrowers who take out five or more loans a year.
Proponents of an initiative also held a rally in Great Falls saying that I-164 would help keep payday loans under control, but lenders say they're being unfairly targeted, and not only would passage of the measure put them out of business, but it would leave their customers with nowhere to turn.
Montana state legislators Anders Blewett, Jesse O'Hara, and a group of other organizations are hoping a bi-partisan effort will help get voters to pass the initiative; Blewett noted that passage of I-164 would cap interest rates at 36%.
Blewett says over the last decade the legislature has failed to regulate payday and title loan lenders which is why they're taking it to the voters. Blewett noted that the 36% interest rate they're proposing is the same rate that credit card companies and other lenders are capped at.
On the other side, payday and title loan lenders say the initiative would put them out of business and eliminate choices for consumers.
To learn more about I-164, click here. Below is a brief summary from the Montana Secretary of State.
- with reporting from Alex Grubb in Great Falls
BALLOT LANGUAGE FOR INITIATIVE NO. 164 (I-164)
As revised by Order of the Supreme Court of the State of Montana
INITIATIVE NO. 164
A LAW PROPOSED BY INITIATIVE PETITION
Under Montana law, deferred deposit (payday) lenders may charge fees equaling one-fourth of the loan, which, as an annual interest rate could range from 300 percent to 650 percent. Title lenders may charge similar interest rates. I-164 reduces the interest, fees, and charges that payday lenders, title lenders, retail installment lenders, and consumer loan licensees may charge to an annual interest rate of 36 percent. It prohibits businesses from structuring other transactions to avoid the rate limit. It also revises statutes applicable to pawn brokers and junk dealers.
I-164 reduces the licenses and examination fee revenue paid to the State because certain lenders may not renew their licenses.
[ ] FOR reducing the annual interest, fees, and charges payday, title, and retail installment lenders and consumer loan licensees may charge on loans to 36 percent.
[ ] AGAINST reducing the annual interest, fees, and charges payday, title, and retail installment lenders and consumer loan licensees may charge on loans to 36 percent.