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The Facts: Bill S. 500 - 36% Rate Cap?
April 9, 2009 - from the Internet
CALL TO ACTION! We need your help to support a strong position on several proposed Bills that are potentially harmful to the Pawn industry. These proposed Bills are trying to control financial businesses that have gone unregulated until now, like Check Cashing and Payday Loan centers and indirectly Pawn Stores.The Pawn industry is regulated by Federal and State agencies, and we consider a Pawn business to be very different at it's core than the others. Pawn loans do not trap the consumer in a debt cycle.
•Pawn businesses have interest rates that are regulated by State agencies
•Pawn stores lend to anyone and use collateral to secure a loan, they don’t sell money
•Most loans are small, short-term loans
The new legislation will limit all Pawn store loans to 36 percent annual interest. Did you know cash-strapped consumers already pay on average:
- 400 percent annual interest for payday loans
- 300 percent annual interest for car title loans
- Up to 3,500 percent for bank overdraft loans
- 50 to 500 percent annual interest for loans secured by expected tax refunds
-Higher than 50 percent annual percentage interest for credit cards that charge junk fees
Congress encourages that “alternatives to predatory lending that encourage small dollar loans with minimal or no fees, installment payment schedules, and affordable repayment periods should be encouraged.” With state regulated interest rates far lower than the above listed, what better way to describe a Pawn store?
If you feel strongly that the American consumer should have the right to borrow money based outside of the banking, credit card and Payday Loan businesses, answer the CALL TO ACTION! and find out how you can make a difference.