Number of Loan Shops Skyrockets
Early in 2006 Sunflower began hearing from people concerned about predatory payday lending shops, which are allowed to charge 390% interest, and car title loan stores, which have no interest cap in Kansas and charge 700% plus fees. There are 14 applications a week for new Kansas loan shops, and in Wichita alone there are already more than 80. Consumers taken in by ads promising easy credit for medicine or car repair, are taking out multiple loans and rolling them over each month. Once taken in, they see no way out!
In May, Sunflower invited Kansas’ Deputy Bank Commissioner to lead a workshop on payday/car title lending. It was attended by 40 consumers, bank officials, and two state legislators. After the workshop, the legislators and Sunflower leaders laid plans to introduce a bill that will protect consumers.
Payday and car title lenders justify their existence by saying banks will not make the small, short-term loans people need. In January 2007 Sunflower convened a meeting with 40 representatives from Kansas financial institutions and guests from the Office of the Kansas Bank Commissioner and the FDIC. Banks and credit unions were encouraged to improve service to customers who have short-term emergency needs.
Sunflower will continue to educate the public, refer people stuck with bad loans, and work with legislators who are writing a bill to curb car title and payday loan shop abuses.
For more information, contact:
J.J. Selmon
Northeast Chapter Organizer
316-264-9972, ext. 12
jason@sunfloweract.org
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