Payday Lenders Can Provide Endless Cycle Of Debt
Posted June 2, 2003 10:19 a.m. EDT
RALEIGH, N.C. — Payday lenders allow consumers to get cash advances by writing a check that they will hold until pay day, but the lending practices have a reputation of trapping borrowers in a cycle of debt. The state legislature is looking at ways to help.
Anita Monti, 59, floated two loans at once.
"A complete chaos every other Friday, running to the bank trying to pay them off," she said. "Owing more money, so that I could pay the next one off and then borrow money from them, so I could go back and deposit in my account and have enough money to just cover my bills."
"We've seen cases where people have paid over $1,000 on a $300 loan in a year," said Reginald Johnson, of the Coalition for Responsible Lending.
Last year, the legislature allowed a bill regulating the industry to expire. Many payday lenders kept on operating. Lawmakers are now considering a new bill that would limit the number of loans and fees consumers pay.
"I would say to you that the bill that passed the House is said to be the strongest consumer-friendly payday lending law in the country" said Rep. Bill Culpepper, D-Chowan.
Monti said she has learned a hard lesson.
"I have learned to never, ever borrow from those people again," she said.
A bill to regulate the payday lending industry in North Carolina passed the House. It is now pending in the Senate.