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Payday loan bill passes in Senate
JEFFERSON CITY, Mo. -- A bill to limit fees on some short-term loans will go to the House for consideration.
The Senate passed the bill Tuesday on a 27-0 vote. The bill caps fees on so-called payday loans at 75 percent of principal, meaning a lender could charge $75 interest on a $100 loan.
Sponsoring Sen. Ronnie DePasco, D-Kansas City, had proposed a 30 percent limit but then amended his own bill to set the cap at 75 percent.
Payday loans are short-term loans for $500 or less. Customers receive cash by writing a check for the loan amount plus a fee, which the lender holds until the customer's next payday.
Under current law, some payday loan companies have charged more than 300 percent interest.
"This helps the consumer," DePasco said. "This means people won't have to pay back more than they borrowed."
There was no debate on the bill, which received initial approval a week ago.
Mark Rhoads, a lobbyist for the Community Financial Services Association of America, which represents payday loan companies, said his group was pleased with the bill.
"It is a fair compromise for the consumer and for the industry," Rhoads said.
The House is considering a similar measure, which cleared committee but has not yet been debated.
DePasco's bill covers loans of between 14 and 31 days and prohibits lenders from approving second loans for those who already owe $500.
Under the bill, payday loans would be prohibited from being paid back from another loan offered by the same vendor. Missouri has more than 700 payday loan stores.
The bill would require the state to report payday loan information, including average interest rates and charges collected by lenders.