Payday Lenders Say Sandy's New Limits Will Hurt Customers

None by KCPW

(KCPW News) Sandy is the latest Utah City to limit the number of quick cash outfits in its boundaries. The trend is to limit payday lenders to one per 10-thousand residents. Cort Walker, a spokesman for the Utah Consumer Lending Association, calls such laws "reactionary" and says they won't make quick loans more affordable:

"Consumers benefit by having an open market where they can shop and lenders compete," says Walker. "When you limit the number of lenders, you drive up the price."

A January 2007 report by the Federal Reserve Bank in New York supports Walker's claim that competition can lead to somewhat lower payday prices. It also finds that charging high interest rates - which average 15-percent and compound every couple weeks - is not a predatory practice as critics suggest. Cities also cite concerns for aesthetics when check-cashing businesses cluster on street corners, often featuring neon lights and bright signs. Walker says there are better ways to improve appearances:

"If that's what the city is after, they should put design restrictions or capital improvement requirements on lenders," says Walker. "But to ban them or to limit their number is not the right approach."

Both the Salt Lake City and Salt Lake County Councils are considering similar restrictions. For years, the Utah Legislature has rejected efforts to impose an interest rate cap on payday lenders.

Email to a friendPosted in KCPW Newsroom. Copyright 2008 KCPW