Brutal Arrests Over Payday Loans On The Rise In Utah
13 Dec 2019
Approx Reading time: 3 minutes
- Utah booming payday loan industry
- Influx of payday and title loans providers
- Payday lenders lobby regulators to shun interest rate caps
Arrests Over Payday Loans On The Rise In Utah
Payday loans might not be a lifesaver but a source of pressure or cause of arrest. That is the harsh reality that residents in Utah are learning the hard way. While payday and title loan companies offer an easy way of accessing quick money, the annual percentage rate that some of them come with continues to trigger outcries.
High Interest Payday Loans
When borrowing money, one is always advised to read the fine print carefully as there is always a catch when the deal is too good. Residents of Utah in the U.S are cringing their teeth some of them having been hit with unbearable interest rates on payday and title loans
Reports of people having to pay back double the initial amount borrowed has become the order of the day in the state. For instance, one resident borrowed $700 only to end up being forced to pay $1400 on the accumulation of interest.
Lack of Interest Rate Cap
The reason why payday loans in the state are turning out to be untenable has to deal with the fact that the state has no cap on the amount of interest that lenders can charge. The lack of interest rate caps has seen payday loan companies charge interest rates as they wish with total regards to borrowers. Some people have had to contend with an interest rate of as much as $150%.
The lack of interest rate caps was initially designed to make the state competitive in attracting lenders into the state. However, as it has turned out, payday lenders have manipulated the system ending up charging as they wish.
Likewise, the fact that lenders can set interest rates on loans as they wish is seen as one of the triggers behind an influx of loan lenders in the state. Residents in the state can access payday and title loans from over 400 lenders more than double the number of McDonald’s, Burger King, and 7-elevens outlets combined in the state.
Risk of Arrest
When you thought things could not get any worse, you were mistaken. High interest rates on payday loans is not the only thing that residents have to contend with. Failure to repay the loans has seen some of the borrowers hit with arrest warrants even though Congress banned debtor’s prisons in 1833.
While it is legal to arrest people who fail to pay payday loans, the lenders have found a way to circumvent the law. The providers, for instance, sue the people who fail to pay the loans. Those who fail to appear in court are consequently hit with arrest warrants
Suing people and seeking an arrest warrant has turned out to be the order of the day in the state’s million-dollar payday loan interest. The number of arrests can only continue to rise as payday lenders continue to lobby legislators to refrain from passing regulations that will impose interest rate caps. Lawmakers in the state have already failed more than once, in their push to regulate the payday loan industry with interest rate caps.