Pressure Placed on Nevada Payday Advance Companies
By Paul RizzoPayday Loan Writer
A KLAS TV report …
When rent money is gone or the paycheck hasn’t come, many Nevadans are in need of a quick buck. Sometimes they turn to payday lenders - companies that give short-term quick cash loans with high interest.
The State Assembly’s top lawmaker is fighting to stop these predatory lenders. Speaker Barbara Buckley wants to control lending terms for loans to keep interest rates down.
Right now, these fast payday loans can last a year or more and have interest rates as high as 600, 700 or even 800-percent rates, meaning a loan for $800 could cost you more than $5,000.
Lending restrictions that went into effect this year were meant to protect consumers by regulating all payday-type lenders. This new proposed legislation would tighten those already strict regulations, and some lenders are fighting it.
When Richard Swanson collects on the loans he issues, customers like Rick Taylor can end up paying 260-percent in interest a year. But to Taylor, that’s a lot better than what a friend paid with another faxless payday advance lender.
“You’re talking 500-percent or more at some of these places and I always thought it should be state regulated or something should be done. To me it’s really a rip,” said Taylor.
Current state law put restrictions on payday lenders who charge exorbitant interest rates on contracts shorter than one year. But Swanson isn’t a payday lender.
Loan Depot is an installment loan company. His contracts simply require clients to promise to repay the personal loan. Swanson recently extended his contracts to up to two years, falling outside of the state guidelines.
“Our rates are a lot lower than the check loans, the payday loans,” explained Rick Swanson, owner of Loan Depot. “It’s a lot easier to pay back a lot less over a longer period of time to get back on your feet than a payday loan where you have to pay back every two weeks or roll it over.”
Swanson says the installment loan method of lending sets him apart from payday lenders. But state lawmakers don’t agree. Assemblywoman Buckley is proposing legislation that would catch installment lenders in the same restrictive net as cash advance loan lenders.
“So, we’re making it really clear that the law applies to all of the high interest loans,” she said.
Where the current law reads short-term loan services, Buckley wants to change it to high-interest loans. That means all high-interest, long-term installment lenders - including installment lenders like Swanson - would face the tighter lending restrictions.
Swanson says the way installment lenders operate should keep them from being included in the regulations. “I don’t think she understands the difference between the two businesses,” he said.
Buckley countered: “I understand the differences between the companies quite well, thank you very much, two types of industry groups but basically the same harm to the consumer.”
For now, consumers like Taylor can continue to pay well over the amount he borrows. “It’s not something I really like to do, but sometimes in between checks and during financial troubles and stuff it’s good to come in here.”
At least Taylor says, he thinks Swanson has the best rates.
The bill also adds legislation that will work with federal laws to cap interest rates for military personnel. If the legislature passes the bill, cash advance lenders will also have to stop collecting on loans from members of the military if they are deployed.
