Bill aims to crack down on high rates for title, payday loans
MEMPHIS, Tenn. — It’s mid-week and we meet Kenneth Sanders outside a pawn shop just outside the Medical District in Memphis.
Money is tight, so Sanders said he pawned a gaming console to get some emergency cash.
“They gave me $150 for it and I got to go pay the light bill.”
For Sanders, pawning is sort of the lesser of the evils.
Sanders explained, “You got 30 days, you can pay on it, or you can get it out. If you can`t get it out, you can pay on it and it`ll linger over. Payday loans, they jack their prices up.”
Sanders says he’s depended on payday loans before, but not anymore.
He said of the fees, “I mean, they can get outrageous, I had to quit dealing with them.”
Sanders explained, “You can borrow about $400 and you`ll be paying them off over a year.”
Congressman Steve Cohen says consumers deserve better protection from high interest rates, hidden fees and what he considers predatory lending.
“It`s a spiraling debt that continues to grow.”
Cohen recently introduced a bill, similar to protections already available to military families, that would cap rates on products like payday and title loans at 36 percent.
Cohen says this is especially important for the most cash strapped consumers.
“There`s plenty of money being made off poor people and it`s unfortunate and wrong and somebody needs to step in,” said Rep. Cohen.
When WREG talked to Sanders about the bill he responded, “That`ll help a lot.”
But Sanders says until changes are made that would make such borrowing cheaper, he’ll get quick cash where he can, to make ends meet.
“I work, my wife works, but we still have to do what we have to do. Sometimes you have to pawn something and sometimes you have to go and get a loan.”
Critics of such regulation say they’re serving an important need and lending to customers who often can’t walk into a bank and get a loan.
Cohen introduced similar legislation in 2014.
The Consumer Financial Protection Bureau recently issued new rules aimed at cracking down on the payday loan industry.