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Mon September 27, 2010
New Alternative to Payday Loans
Kansas City, MO – Missouri has some of the loosest regulations in the country for the payday loan industry. The state is home to almost 1300 payday loan operations, compared to neighboring states that report 500 or fewer payday loan businesses.
Critics call these operations "predatory lenders" who take advantage of the poor with steep interest rates and unreasonable penalties for late payments. But industry representatives say that they provide access to cash for people can't get loans otherwise, and that high interest rates cover the increased financial risk involved.
Enter the Payday Loan Alternative Project, a partnership between Communities Creating Opportunities and the FDIC. The project intends to develop an alternative to payday loans for cash-strapped people. The project plans to loan money at a 36 per cent interest rate. But organizer Joy Friedman says, compared with the payday loan industry, CCO believes it can offer the public a fairer deal.