Are Payday Lenders Regulated?
The Mississippi Center for Justice, which is a public interest law firm and is considered as non-profit, has asked leaders in the city to join them in campaigning for stricter laws concerning payday lending. Officials standing for payday lenders have spoken up as well.
Dan Robinson, Borrow Smart Mississippi spokesman said that they are also regulated just like banks. He further added that, “Naturally the banks don’t want us to be in businesses because we’re costing them a lot of business.” There are about 300 short-term lenders in the state of Mississippi, and most are members of the organization.
According to the Center for Justice, the payday lending business is “predatory” especially to those who are facing economic woes. They are criticizing the annual interest rate of up to 572% that the payday lenders charge. This high interest rate became possible when state lawmakers, in 1998, lifted the cap on the rate of interest that payday lenders could charge short-term loans. Most of these loans are only good for two weeks. Before the cap was lifted, the interest rate that payday lenders could charge was only limited up to 36%.
Robinson, representing the payday lenders in the state, said that the Center for Justice is using false information in order to sell out their campaign.
The Center for Justice, on the other hand, is hoping that it could dissuade lawmakers in Mississippi from granting another extension to the repealer of the cap on interest rates that payday lenders charge. The repealer is set to end on 2012.