Legislation needed to protect Montanans from 'payday' loans

To the Editor:

Someone facing an unexpected bill, for a car repair for example, might borrow money from a business offering "payday loans" or "title loans."

Unfortunately, the loan might be subject to 300 percent interest. Thus borrowing as little as $200 would mean that they would owe $600 in interest plus the original $200.

Often the person might feel it necessary to take out another loan to pay off the first.

Those of us who consider ourselves Christians feel this is contrary to the message of the carpenter from Galilee.

A bill before the Legislature, HB29, would have capped these loans at 36 percent or $72 on a $200 loan, which seems like a great rate of return for a business. However, the bill has failed before the House Business and Labor Committee on which Libby's representative, Ralph Heinert, sits.

Some voted no because they feel there is a high default rate on these loans. No wonder! If you don't have $200 for a repair bill, where are you going to find $800 to pay the loan back?

HB29 would also have capped payday loans at 25 percent of a consumer's net income, made sure each person has only one loan at a time, set up a repayment plan, prohibited additional loans, established a mandatory 30-day term for title loans and established a complaint and hearing process. The bill is based on a similar plan passed by the Republican Congress last session to protect soldiers from predatory loans. Why don't Montana Republicans want to protect Montana citizens the same as the soldiers are protected?

It seems to me that 36 percent is more than adequate interest for businesses to earn on money they loan to desperate people. Write Ralph and let him know how you feel about these predatory practices that are targeted at the poor and unsophisticated.

Eileen Carney