Initiative would severely limit payday loans
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A group is planning to gather petitions for a ballot initiative that could cut back the profits of payday and car title loan businesses in Montana. A coalition is creating an initiative to limit the interest a business can charge on a loan to 36 percent a year, which would affect businesses that charge the equivalent of hundreds of percent in interest. In Montana, the current legal rate for payday lending is 650 percent a year, the initiative supporters say. The issue was a headliner in north-central Montana last fall, when a business created by the Chippewa Cree Tribe of Rocky Boy's Indian Reservation, the online payday loan company PDL Ventures, was one of the top complaint-getters of the regional Better Business Bureau office that covers Montana. It is unlikely the initiative will affect payday loan operations on sovereign Indian reservations unless legal actions are pursued. Tribe representatives said at that time the story broke that they were working to improve their customer service. The initiative targets payday and title loan companies, which solicit short-term loans, usually $100 to $300, using future paychecks or vehicle titles as the collateral. Loans often are made with repayment of the principal plus a dollar amount per $100 borrowed due in seven to 30 days. A press conference was scheduled in Helena at 10:30 a.m. this morning with representatives of AARP Montana, Rural D y n a m i c s Wo m e n , NeighborWorks Montana and t h e Monta n a C a t h o l i c Conference, Women's Foundation of Montana and Montana Women Vote set to announce the initiative. The initiative was to be filed with the Secretary of State's office immediately following the press conference. According to the Secretary of State's Web site, for the inititive to be placed on the 2010 ballot, the supporters must collect signatures from 5 percent of the total number of qualified voters in Montana, including 5 percent of the voters in each of 34 legislative house districts for a total of 24,337 signatures. According to the Women's Foundation of Montana Web site, women's groups have joined the push for the initiative because they see women as a group highly affected by "predatory lending." The Web site says that, from 2005 to 2007, Montanans borrowed more than $141 million from payday lenders and paid more than $25 million in interest and fees. In August 2007, the Web site says, 57 percent of loans made in Montana, a total of 102,986, were made to 7,922 people who borrowed repeatedly through the year. Some work already has been done to limit payday lending. In 2007, Congress passed the N a t i o n a l D e f e n s e Reauthorization Act which included capping the annual percentage rate of loans to military personnel at 36 percent.