TOPEKA, (KSNT) – Kansans, who pay high interest rates on payday loans, could see some changes with a new bill being introduced.
Reverend Annie Ricker, who leads the Berryton United Methodist Church, is one of several members of a community activist organization called “Topeka Jump” calling on lawmakers to push for payday loan reform in this session.
“We’re trying to do what other states have successfully done, cap the interest rates on these payday loans, make them still viable for businesses, but also make them affordable and non-exploitative for the people who take them.” said Ricker.
Ricker said the law that was introduced is currently below that of the state House Financial Institutions Committee, chaired by Representative Jim Kelly, R-Independence.
The proposal would cap the interest rate, limiting the risk of rising interest rates for the borrower and allowing the lender to earn a higher return when interest rates are low.
It would also create an installment plan for repayment so they don’t have to deal with debt, which Ricker calls “crippling” debt that can take “months” to clear. She told the Kansas Capitol Bureau that she was in a similar position when she first moved to Hays and was fresh out of college.
“I had no banking history in this community, and we had an auto repair business, and the only lender we could find to lend us money was a payday lender,” Ricker said. “We borrowed less than a thousand dollars, but by the time we repaid the loan we had paid over three thousand dollars. It failed us and it cost us a lot more than it needed to.”
Payday loans are short-term loans that often carry high interest rates and the expectation that the borrower will begin repaying the loan on their next paycheck.
Critics of the loans have called them “predatory” and singled out low-income families.
Representatives of other organizations supporting the legislation, such as Rabbi Moti Rieber of the Kansas Interfaith Action, KIFA, said the loans would “fall further behind” people who are already economically disadvantaged.
“It takes money out of the pockets of the hard-working poor,” Rieber said.
Ricker hopes lawmakers will act soon and put it up for debate this year to help other members of their communities who are also struggling to pay off these loans.