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Check cashing stores make big bucks on payday loans at extremely high interest rates, which often end up hurting consumers. State lawmakers have a plan to help ease that financial burden.
Hundred of stores offer those in need cash loans until payday. A $200.00 loan cost $30.00, the charge is $30 each two week extension thereafter. For some people, using a payday advance loan doesn’t solve their money shortage. They simply get in a money pit that makes it tough to pay their way out dept.
Debra is one customer who needed money for bills and Christmas gifts. She paid interest only, never touching the loan principal. She says, “I ended up having to get help from someone to pay the loan. The debt can add up after a while and I ended up in a rut that was hard to get out of.”
State lawmakers want stores to lower interest rates from 15% to 12% and allow borrowers to pay in four installments. This will allow them to get themselves out of this dept spiral. Loan stores say that the consumers need to take more responsibility for making their debt and should go elsewhere if they need long-term loans.
Consumers like the lawmaker’s idea and like others, wonder if they would ever have enough cash to pay back the debt. Loan stores support a bill that would allow lower interest to 12% rates, but unlike Senator Don Peralta’s bill it would not allow an extended period repayment time.
(This story was provided by News10 KXTV Sacramento.)