Payday Loans Are Preying On Borrowers In Kansas, Non-Profits Call For Tighter Regulation | Credit Raters post

Payday Loans Are Preying On Borrowers In Kansas, Non-Profits Call For Tighter Regulation

24 Oct 2019
Approx Reading time: 3 minutes

Payday loans are there to save a situation whenever things get worse and no one is ready to loan you. However, these loans do attract significantly high-interest rates on the money borrowed and can leave one dry.

Kansas had 685,000 payday loans last year

Several people rely on the payday loans to pay off debt, afford basic need as well as cover other unexpected expenses. They are popular and in 2018 in Kansas, there were around 685,000 payday loans. According to the State Bank Commissioner's Office, the loans were worth around $267 million.

Lenders have maintained that the payday loans are the only alternatives that people who can’t borrow from family have. They equally argue that it is also a route for people that do not want to take loans from the bank or have expenses on a credit card.

However, critics indicate that the high-interest rates are exploitative on individuals who can least afford them. Various non-profits in Kansas have indicated that the interests are almost triple normal rates which are exploitative. The groups have equally indicated that the State needs to regulate the loans as it is lagging behind other states.

Read More: How Can I Apply For A Payday Loan?

Catholic charities helping borrowers out of payday loans

There is however reprieve for people who have been taking payday loans. For instance, the Catholic Charities of Northeast Kansas runs a program called the Kansas Loan Pool Project. The project helps families make payments on their payday loans which helps them in building their credit score. So far the project has helped over 200 families by paying off around $254,000 in exploitative loan debt.

Claudette Humphrey who runs the Catholic Charities of Northern Kansas indicates that the program has been of huge help to the community. However despite around 200 people benefiting from the project she asserts that they have not managed to help all. She says that the reason they have not been able to help more people is because they have a limit.

Humphrey indicates that the program only helps those with a payday loan debt of less than $2,500. Therefore that means they can be able to service a low-interest facility. The program does not want to plunge the individuals into more debt.

Pushing for regulation on payday loans in Kansas

The non-profits are pushing for tighter regulation governing the payday loans. This is because some states have already implemented regulations on the same. Shanae’ Holman who is leading the push for a change in regulation says that some states already have regulations in place. She says that they have set how much of the income should go into repayment of the loan. Therefore those are the kind of regulations they expect in Kansas.

Equally the group is advocating for longer repayment period so that borrowers aren't penalized when they are late in repaying. For instance in Colorado borrowers have up to six months while in Kansas the payday loans have a repayment period of 30 days. Also in Ohio borrowers have up to one year to pay back the payday loan

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Rebecca White

Rebecca White is chief editor at Rebecca has an extensive amount of knowledge on financial subjects including short-term loans & debt consolidation in the UK and USA. Rebecca has wrote for many publishers such as Debt Secret, My Money, VL and more.