The city of Columbia’s legal team will draft a bill calling for heavier regulations on payday loan companies.
Payday loan companies offer small loans that borrowers usually promise to pay with their next paychecks. The loans involve minimal application requirements and are predominantly taken out by low-income residents.
Regulations being pondered by the city are similar to those recently passed in St. Louis and Kansas City, including:
- Requiring that lenders post in 24-point bold font the annual percentage rate of interest, the rate that would be charged if a loan is rolled over six times as well as any fees that would be charged.
- Imposing zoning regulations that prevent short-term lending companies from locating within a mile of each other; within 500 feet of houses, churches or schools; within 150 feet of a park; or within 1,000 feet of a designated historic landmark.
- Requiring lenders to buy annual permits of $1,000 per year in Kansas City and $5,000 per year in St. Louis. Both cities cut the permit cost in half if there are fewer than six months left in the year.
- Allowing inspectors to visit during business hours and to impose fines of $100 to $500 for violations.
- Following a “Good Neighbor Plan” to keep illegal activity from happening on lenders’ property.
Mayor Brian Treece noted that the loans can be important for residents living paycheck to paycheck to help cover unexpected costs, but he still believes more regulations are a good idea.
Read more: Columbia Missourian