KC group creates alternative to payday loans - KCTV5 News

KC group creates alternative to payday loans

KANSAS CITY, MO (KCTV) -

In these tough economic times, a local group is offering some help to those looking for an alternative to payday loans.

The horror stories have been told before: people down on their luck who get a payday loan and end up spending sometimes close to 500 percent interest on a $300 loan, falling deeper into debt.

"The sad reality is that there are a lot of folks in our society who fall into that trap," said William Dana, president of Central Bank of Kansas City.

The Fair Community Credit Group, a Kansas City nonprofit group, is now offering an alternative. They are a group of churches, bankers, lawyers and nonprofit agencies planning to offer small loans.

The group says it hopes to issue 500 loans this year, ranging from $300 to $2,500. The loans will carry double-digit interest, rather than the triple-digit interest charged with payday loans.

Of course, this has the payday loan businesses on the defensive.

One lobbyist for United Payday Lenders of Missouri says the industry helps people who need quick cash, and is always up front about the interest it charges.

But Ace Wagner of Fair Community Credit said too many borrowers are ignorant about the high interest rates they are signing up for.

"That we need to change," Wagner said. "Our intent is to simply put a more competitive product on the street, something that does charge a lower price for the service . . . in the hopes that we can have others do the same thing."

The nonprofit hopes that this first experiment will go well, so they are only offering these loans to customers who come to them through referrals. No walk-ins are allowed.

Those with good credit will be reported to the credit bureaus in an effort to boost their scores. It's part of a solution that the groups are trying to craft, Dana said.

For more information on a petition effort to regulate payday loan businesses in Missouri, click here.

Copyright 2012 KCTV (Meredith Corp.)  All rights reserved.

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