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HELENA - Montana law allows payday loan companies to charge 650% annual interest rates, while title loan companies can charge up to 300% APR.

The AARP and the Montana Catholic Conference have proposed language for an initiative to cap annual interest rates on payday and title loan companies.

They say these rates exploit the poor and take advantage of the vulnerable and the proposed language would only allow the companies to charge up to 36% annually.

"These kinds of things are exploitative and it leads into debt trap, that does happen. And we don't think that this kind of rate of 400% should be allowed" AARP State Director Bob Bartholomew told us.

He says the companies charging high interest rates prey on the poor.

One payday loan business owner says if that initiative passes, then it could put all small financial services out of business.

Bernie Harrington of E-Z Money Check Cashing says by law, payday loan businesses in Montana cannot loan more than $300. And a typical fee is $15 for every $100 spent, which can be interpreted as an approximate annual rate of 400%.

"This industry is not gouging the consumer, it's the cheapest option for the consumer that's available to them for short term loan" Harrington said.

He added that if the measure passes, then a 36% APR cap would mean his business would get $1.38 back for a $100 loan. Lawmakers proposed the initiative in each of the last five legislative sessions.