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Springfield City Council last night unanimously approved a short-term lending ordinance to regulate payday loan companies in the area.
The code requires short-term lending institutions to apply for and obtain an annual permit from the city within the next 60 days. Subject to voter approval in August, the city would also collect an annual permit fee of $ 5,000, or $ 2,500 if less than six months remain in the calendar year in which the permit is issued. , according to the invoice documents. The city cannot begin collecting the fees until 60 days after voter approval.
Starting today, payday loan business owners are also required to post information on-site that consumers can view, such as interest rates and fees, and provide borrowers with repayment information. .
Those found not to comply with the new code could face penalties or fines, jail time, or both, according to the bill documents.
The council has considered the regulation of short-term lending for several years, and council members acknowledged in last night’s videoconference meeting that further reform will need to be made by state lawmakers.
“It’s been a long road for us to get to the vote tonight,” said Councilor Andrew Lear. “We know that any real reform will require action at the state level, but I think this bill sends that message, and I am confident that in August the citizens of Springfield will send the same message when they go. at the polls, or I hope to send or deposit their ballots.
Mayor Ken McClure agreed that “the only real solution” is state-level interest rate legislation.
Missouri’s maximum annual percentage rate of 1,950% is the highest in the country for a 14-day loan of $ 100, according to the nonprofit Consumer Federation of America. The next closest maximum interest rate is 780%, in Louisiana and Wyoming.
City Councilor Mike Schilling has expressed concern for borrowers during the coronavirus pandemic.
“It’s kind of an ironic time where we are in some kind of economic downturn that could be even more damaging to people in this situation who need these high interest rate emergency loans. I hope that gets people at the polls to think about moving forward, ”Schilling said.
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