Lowa City Must Put a Stop to The Proliferation of Payday Lenders
Lowa City Must Put a Stop to The Proliferation of Payday Lenders
The City Council of Lowa is concerned about the proliferation of payday lenders operating in the city. Through its zoning powers, the city council wants to regulate the number of payday lenders in Iowa City to protect the welfare of the people in the local community and to strengthen the city’s economic development.
The members of Iowa Citizens for Community improvement are strongly supporting the move to:
- Limit payday lenders to only one per 20,000 residents in the city
- Observe one mile distance away from churches, residential areas, schools and parks. The distance between two payday lenders should be two miles.
- Stop new stores to operate in pedestrian commercial districts
Lowa City’s payday loans are limited to $445 and to be paid in full within 14 days. The borrower is required to issue post dated check amounting to $500 or another option is an automatic withdrawal of $500 from his/her bank account. In other words, the APR for this type of loan is more than 400 percent which is higher than the 250 percent the Mafia was charging during its hay day.
Borrowers of payday loans are easily trapped to repeat borrowing money from payday lenders because their paychecks are not sufficient to pay in full a $500 loan in two weeks. In fact, 98% of the funds released by payday lenders go to repeat customers. In Lowa City, 76% of payday loans released every couple of weeks go to new customers.
Payday loans create more financial burden in families instead of helping them. And the companies involved in this business are not paying their income taxes to the city of Iowa. Approximately, Iowa is losing $36 million from taxes every year. The money goes to the bank accounts of the CEOs’ of payday loan companies instead of going to the treasury of Lowa City.
This is the reason why the Iowa CCI members are pushing for the Lowa City Council to use its zoning powers to curb the increasing number of payday lenders in the city. The council should give priority to the interest of the people and not on the corporate interests. People should be put first and not capitalism.
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Filed under: bad credit • Credit • payday loans • Personal Finance • personal loans
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