A grassroots group of community and faith leaders announced Tuesday that they will ask Missouri voters to approve a measure capping the rate of interest charged on payday loans.
The group, which is calling itself Missourians for Responsible Lending, hopes to have the measure placed on the November 2012 ballot. Missouri has among the weakest laws and regulations in the United States.
In Missouri, the storefront lenders can charge as much as 1,950 percent interest. In Missouri, the average interest rate for a payday loan is 445 percent annually.
One woman paid more than $1,000 to repay a $300 loan, a KCTV5 Investigation last month revealed.
A $300 payday loan costs the average family $710 and borrowers have to take out an average of eight loans before they can repay the original debt, the grassroots group says.
"It's putting people out of their homes and jobs," said David Altschul of Communities Creating Opportunities. "One man committed suicide because of these payday loan issues...This entire situation is, you know, unconscionable."
Altschul said Missouri has "lost our moral compass," and that getting the measure passed is vital.
Payday and title loan lenders would see their loans capped at 36 percent. This is an amount similar to other states. Congress approved a 36 percent cap for military members and their families in 2006.
Volunteers must gather 90,000 signatures from across Missouri in the coming months to get the proposal on the ballot.
Leaders for the initiative petition drive expect a strong lobbying effort against the proposal.
In a statement, the Consumer Rights Coalition said the petition effort is "an ill-advised assault on all forms of consumer credit." The organization said the cap "would hurt Missourians by eliminating their only real credit options and forcing them to more expensive and credit damaging alternatives."
A session to discuss fair lending for area families will be held next week at St. Peter's Catholic Church, 6415 Holmes Road. The Interfaith Call to Action will be held from 7-8:30 p.m. Tuesday, Aug. 16. Click here to get more information and register for the event.
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