Payday lenders are not well regulated

(UNEDITED) I strongly disagree with Richard Rawle's recent letter regarding payday lenders in which he speaks about Ogden City's efforts to over regulate an already well-regulated business. Payday lenders in Utah are hardly well-regulated. Utah is one of only 4 states with no cap on loan fees or interest rates. The others are Delaware, South Dakota and Nevada. 13 states have made payday lending illegal or virtually impossible. Is it any wonder we see more and more payday loan businesses popping up in our communities here in Utah.

For the most part, states regulate their own loan fees and interest rates. However, in 2006 Congress passed a law effective October 1, 2007 which capped lending to U. S. military personnel at a maximum APR (annual percentage rate) rate of 36%. Reasons given were concerns that payday lending ruined low-paid enlisted men's and women's finances, jeopardized their security clearances, and interfered with deployment schedules. The concern about ruining the finances of low-income individuals and families applies to those outside the military. Payday loan fees and interest rates start at about $10 on a $100 loan for one week, and can quickly build up to over 500% APR as loans are rolled over if the client is unable to repay in full when initially due.

The Coalition of Religious Communities is a coalition of members of various religious faiths in Utah who seek to provide a voice in the local, State and Federal government for the poor and under-privileged. Their motto, a multi-faith response to poverty, embodies the directive in major religious faiths to care for those in need.

Utah does impose the following regulations on payday lenders. They must allow a client to rescind a loan by returning the check by 5 p.m. the following business day, allow partial payment of at least $5 on the principal, limit rollovers to 12 weeks from the initial loan, and conspicuously display fees and interest to their clients. These few regulations are thanks in part to the work of the Coalition over past years. As long as the State rejects stronger regulations of payday lenders, the Coalition will support efforts by local governments to limit these businesses.

Carolyn Somer

N. Ogden