Montana Voting on Further Payday Loan LegislationPayday loan regulation in
Montana has become the hot-button issue on the upcoming November 2nd ballot, even though laws have been in place restricting cash advance and payday loans for over a decade.
The laws in place restrict lenders from charging more than 25% the amount of the loan as interest and cap loan length at 31 days. Montana State laws also prohibit loan rollovers and state that no borrower can have more than one loan open at a time.
Even though laws are already in place, supporters of the initiative believe that payday loans are predatory.
Initiative-164 is backed by a group named 400 Percent is too High – Cap the Rate. Their goal is to place a cap on the annual interest rate of payday advance loans at 36%.
Montana loan lenders believe that the initiative is specifically aimed to put them out of business. If it passes the most they could charge for a $300, 31-day loan is $4, which would be unprofitable. APR’s are an unfair barometer for
cash advance loans because they are calculating annual percentage rates for a one month loan. As the laws stand the most that they charge is $35 total for a $300, 31-day loan.
Measures make the State ballot by petitioning signatures, supporters where able to collect over 27,000 signatures from registered voters in over 54 districts in the State of Montana.
The Montana Consumer Finance Association has tried to have I-164 taken off the ballot twice, claiming that signees were not presented the full text of the measure, that petitioners turned in false signature affidavits and that the petitions were unlawfully notarized.
On August 17th the State Supreme Court denied their request, then on October 7th District Judge C.B. McNeil sided with the Supreme Court and rebuked the MCFA’s appeal.
Payday cash loans have found a niche in the financial industry, serving lower-income consumers that banks would otherwise not lend to. If I-164 passes these people who already struggle financially would have nowhere to turn in case of emergency. Instead of outlawing financial services that are necessary and viable, what should be preached is financial responsibility.
Montana law already states that a consumer can only have one open payday loan at a time, outlawing consumer loans would not only hurt business owners, but Montana citizens as well.