A petition drive is under way in Missouri to qualify a ballot initiative that would cap the interest rate on payday, car title, installment and consumer credit loans in the state.
If successful, the effort would place the following question before Missouri voters on the November 2012 state ballot: "Shall Missouri law be amended to limit the annual rate of interest, fees, and finance charges for payday, title, installment, and consumer credit loans and prohibit such lenders from using other transactions to avoid the rate limit?"
Behind the effort is a nonprofit organization called Missourians for Responsible Lending in Glascow, Mo. In a statement, the group said Missouri allows some of the highest interest rates of any state in the nation and has more payday loans than almost any other state.
The group's treasurer, the Rev. James Bryan, a retired minister of the Missouri United Methodist Church in Columbia, said people of faith "can no longer ignore this financial exploitation in our communities."
A fact sheet posted on the group's website said 2.4 million payday loans, averaging $307 and collectively totaling about $747 million, were made in Missouri in 2010. Each time a loan is renewed, the borrower must pay off at least 5 percent of the original principal amount. The average loan was renewed 1.6 times.
The group also offered an intriguing, though rather curious comparison, stating that in 2010 Missouri had 325 McDonald's restaurants, 157 Starbucks coffee outlets and 1,040 payday loan stores.
Opposing the ballot initiative is another group called the Consumer Rights Coalition, which claims to be consumer-based and appears to represent the interests of payday lenders.
Gerri Guzman, the coalition's executive director, said in a statement the initiative was "an ill-advised assault on all forms of consumer credit that, if passed, would hurt Missourians by eliminating their only real credit options and forcing them into more-expensive and credit-damaging alternatives."
Cast your vote: Should payday loan interest rates be capped or is this initiative indeed ill-advised?
Follow me on Twitter: @marciegeff