New regulations targeting predatory loans

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SPRINGFIED, Mo. On Thursday faith leaders and industry lenders will flocking to Kansas City to speak about predatory loans.
The Consumer Financial Protection Bureau is expected to release proposed rules for the payday, title, and installment loan industry during hearing at the Kansas City Convention Center tomorrow morning at 10:00. The rules released tomorrow won't go into effect until later this year, after a public comment period.
You can find a loan business in almost every strip mall in Springfield. There are countless places to get quick cash for a high interest rate. But the feds could soon change the way they do business.
Brentwood Christian Church Reverend Phil Snider is one of several faith leaders who will be in Kansas City to show support for predatory lending regulations.
Snider said, “Our scripture traditions, and the ethical ethical traditions down through the century talk about the way that taking advantage of the venerable by predatory lending is problematic.”
He says the industry needs to be regulated because Missouri has the highest interest rates on loans. Snider says not all loans are predatory, but it’s time for the government to make rules that prevents these businesses from taking advantage of the poor.
“We’ve been advocating to cap the rate at 36%. Payday lending rates can go to around 400%, at times over a thousand percent. And a person just falls farther and farther into debt,” he said.
Pete Zerr is in the title loan business. He owns Affordable Equity Finance in Springfield.
He said, “You cannot draw the line and say 36% is a regulation you can live with.”
He says that cap would prevent lenders from making a profit on small, short-term loans.
“A lot of these church groups don’t realize how labor intensive this business really is. And how hard it is to collect the money, and the percentage of losses that you take,” he said.
He agrees that the industry needs regulations, such as only lending money to those who will be able to repay it.
Zerr said, “I don’t think it would be ethical to loan people money if they don’t have the ability to pay. That has always been our policy.”
But Zerr says too many regulations could hurt an industry that many people depend on when they’re in desperate need for a loan, and they don’t qualify for a loan from a bank.