Rationalist Society of Saint Louis Message Board › New InkandVoice Commentary
First - Thank you all for having me speak last Sunday. I enjoyed the company.
Borrow $500. Pay back $600 in 14-days at 521 percent APR. Pay it back in 90-days and the intersect rate charged exceeds the principle by 150 percent, if not more.
In Missouri, as in every other state of the Union and Canada (and I assume overseas as well) there are lending companies that provide a service generically called “pay-day loan.” These companies provide signature loans of $500 to $1,000 to those who need a short term financial boost and for those who cannot receive a loan from a traditional source because of past credit problems or owning no assets. The only requirements are having an active checking account, a job, and the ability to sign the loan documents.
These companies are, in fact, a necessary evil in some communities, especially in our current financial status. But there is a problem.
Though there are limits on the number of loans, the APR for these high risk loans average about 450 percent with highs being reporter over 1900 percent APR. For most trying to avert a financial crisis, this just adds to the problems for financial disaster.
Missouri is now offering a bill that would limit pay-day loan interest to 36 percent APR. HB-1294 was filed by state representative Mary Still, D-Columbia, and is moving nowhere fast. As of March 1, 2012, it has not been scheduled for its first reading in the House chambers. The reason will be discussed in a bit.
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