The Missouri Legislature passed legislation to restrict payday loans, but representatives of some community and faith-based groups said it includes no real reforms. The sponsor said the main benefit of the bill is that it prevents rollover loans and “stops this cycle of debt that people are in.”
Under the current law, short-term loans for between 14 and 31 days and up to $500 can be renewed or “rolled over” up to six times and interest can continue to accumulate. Four out of five payday loans are renewed or extended.
During debate on the House floor, opponents pointed out that there was nothing to stop a borrower from simply walking next door to a different lender and getting another loan. Opponents of payday loans and the legislation sent to the governor said the only real reform for the industry would be a strict cap on annual interest rates and fees at 36 percent.