Some people find themselves in tough situations financially and the only way they see to fix their situation is to get a payday loan, seeking fast cash to help them. However, the fast cash often leads to loans that take months, or even years to repay, with interest rates that are up to 300 percent, and fees and surcharges adding more to the bottom line.

I sponsored, and this week passed, Senate Bill 694, which would modify many aspects of the payday lending law and completely change the industry in our state. This measure would end consumers abilities to renew their loan or ask for an extension. EPPs (Extended Pay Plan) will be allowed to help pay off loans. Under the EPP, borrowers have up to 120 days to pay off their loan. The payment plans are based off of the consumers’ pay periods and no interest or fees are charged during the EPP. There will be no early payment penalties, but the lender does have right of acceleration upon failure to pay. Only one EPP is allowed each year.

Under Senate Bill 694, payday lending businesses would have to pay $500 for yearly fees, up from the current $300. These fees would go to the Missouri Division of Finance. The measure also states that  signage must be posted in the lobby of such business that display the cost to borrow the money, per $100 borrowed. If we can provide the best information to consumers in a way that they can understand it, then we are already helping them make better financial decisions.

There needs to be legislation in place that protects the consumer from some of the practices payday lenders have utilized for so long.  With the exception of instances when a borrower closes an account or stops payment on a check, lenders are barred from threatening criminal proceedings against a borrower if a check given as security for a loan is dishonored. Those who knowingly do so are liable for three times the amount of the check. Business owners or lenders are required to comply with the Fair Debt Collection Practices Act regarding harassment or abuse, false or misleading misrepresentations, and unfair collections practices.

Under current law and this measure, the Division of Finance is required to report certain information relating to the payday loan industry to the General Assembly every other year.

It is important for consumers to be protected and Senate Bill 694 will help do that.

Welcoming Guests to the Capitol

For a while on Wednesday, Casey Buehler, a senior from West Plains High School, shadowed me through the Missouri Family, Career and Community Leaders of America program (FCCLA). He was one of 50 students selected from across the state. Casey has a strong interest in state government and the political process. It was great having him here, he was very motivated, interested and it is clear Casey is  interested in what is going on in the Missouri Senate.