A new fact sheet published by Pew Charitable Trusts reports that Idahoans pay the highest fees on payday and title loans in the United States!
How State Rate Limits Affect Payday Loan Prices, documents Idaho’s interest rate for these loans at 582% APR.
Idaho families are struggling with low wages and high interest rates. This problem was highlighted by low income families in Caldwell who had lost cars, jobs and homes because of predatory lenders. ICAN members in Caldwell worked with the Caldwell City Council to limit the growth of these businesses, as a first step in protecting their residents.
These high fees also attribute to the loss of small businesses and jobs, which has an impact on us all. When working families pay high interest fees, they have less cash to spend in their communities. Idaho’s Main Streets began to resemble ghost towns, as local businesses bear the impact when local economies dry up.
Pew also lists policy recommendations to help states establish fair lending policies.
“Policymakers in states with conventional payday lending can reduce the harm caused by unaffordable payments and noncompetitive prices by implementing Pew’s policy recommendations:
- Limit payments to an affordable percentage of a borrower’s periodic income. Pew’s research indicates that monthly payments above 5 percent of gross monthly income are unaffordable.
- Spread costs evenly over the life of the loan.
- Guard against harmful repayment or collection practices.
- Require concise disclosures that reveal both periodic and total costs.
- States should continue to set maximum allowable charges on loans for those with poor credit. In states that have permitted higher interest rates than Colorado’s, storefronts have proliferated, with no obvious additional benefit to consumers.”
In light of Idaho Legislature not passing a rate cap to protect citizens from predatory lending, ICAN is asking all cities in Idaho to adopt resolutions supporting these recommendations. Without strong state regulations City Councils must step up and protect local economies, hard working residents and local small businesses. To support our Fair Lending Campaign, please call 208-385-9146.