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KANSAS CITY, Mo. – There are more payday loan stores in Missouri than the number of McDonald’s and Starbucks combined. A vote-to-rule over payday lender initiative is now gaining traction.
The Communities Creating Opportunity nonprofit group is helping establish an equitable community lending agency in Kansas City. It would compete with payday lenders, but charge 36% interest instead of the triple-digit rates charged by payday lenders.
Elliott Clark volunteers in a pantry because he says he knows what it’s like not being able to make ends meet. Clark’s wife broke her ankle four years ago and couldn’t work for over four months. Unable to pay all the bills on his own, Clark turned to a payday loan for help. He calls it the worst mistake he could have made.
“Eventually one payday loan turned into another and then into another,” Clark said. “In no time, I had a total of five payday loans, for a total of $ 2,500, but I couldn’t pay them all off at once, I ended up paying off 30,000. $ over a three-year period. it is in the interest.
Clark says the banks are not interested in making small loans under $ 5,000, which he needed at the time. He says payday loans were his only options. These loans carry an interest rate of 495%.
QC Holdings, Missouri’s largest payday lender, says if Clark had borrowed from Quik Cash all he had to do is apply for an extended payment plan that would have given him two months to pay off what was originally a two-week loan without supplement. Cost. QC says it provides credit where there would be none otherwise. It helps customers avoid higher bounced check charges that can amount to 3,500% interest charges. Yet Clark supports a Missouri voting initiative that would cap all lending at 36%.
“Banks have been making money with interest rates of 18%, or 21-27 for years,” Clark said. “But these payday loan companies tell us they can’t survive on 36%. Yes you can. Banks have been doing this for a long time. how come you can’t
Clark says he lost his house to foreclosure while paying off the payday loans. He hopes that a new community lender established by nonprofits can help fill the need without trapping the poor in a cycle of debt.
Hundreds of volunteers are circulating petitions calling for the loan cap to be placed on the Missouri ballot in the fall of 2012.
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