Utah Lawmakers Consider Restrictions on Military Payday Loans
By J.J. CameronPayday Loan Writer
Sorry, folks, but the issue of payday loans for the military isn't going away.
Despite questions being raised about a recent Department of Defense report that called the faxless payday loan industry harmful to the war on terrorism, Utah is considering a restriction on these resources.
Twelve states prohibit triple-digit rates on cash advances, according to the Consumer Federation of America. Utah, however, currently doesn't regulate them, but Rep. Paul Ray, R-Clinton, said it's an issue that needs to be looked at.
"Both the religious and military community is very concerned about this issue," Ray said. "I do have some major concerns, especially when it affects the readiness of our troops."
The Pentagon has proposed an interest rate cap of 36 percent on such fast cash loans. However, Ray, who works as a commercial mortgage broker, said he isn't sure capping interest rates is the correct course.
"It is still too early to look at that," Ray said. "Putting caps on interest rates can influence other lending areas."
A spokesman for the Utah Consumer Lending Association and Check City, a leading short-term loan financial institution, however, called the instant payday loan federal report flawed and single-sided.
"We think the department's report is deeply flawed," Cort Walker said. "The department relied on anti-business groups that lacked the data to make such a report. What we find interesting is that one of these anti-business groups published the report on its own before it was even given to Congress. It is biased."
The Pentagon report cites one study that says military personnel are three times more likely to get a payday loan than a civilian. But is that valid?
The report said while it can make some improvements through education and regulations governing military personnel, it can't prevent predatory bad credit payday loan lending without help from Congress and the states. Sen. Greg Bell, R-Fruit Heights, agrees there is a problem, saying it hurts more than military personnel.
"We need to do more about this industry," Bell said. "They prey on low-income folks as well as the military. These people fall victim to this. To me it's really usury."
