FRANKFORT, KY (WAVE) - Critics call it a debt circle, sinful, and predatory. Payday lenders give people cash, or a short-term loan, but it's not without a price. A bill in Frankfort, however, would cap the interest rate at 36 percent. Those against it say the bill would put lenders out of business.
This is the third time Rep. Darryl Owens (D-Louisville/District 43) has filed this legislation and next Wednesday it will finally get its first hearing in the House Banking and Insurance Committee.
"It was during my time at UPS Logistics, when I was making a decent salary, I got my first payday loan," said 65-year-old Mary Love of LaGrange.
That was the first of 26 loans. Love says she got a new loan every two weeks for a year, to pay off the old one. She paid nearly $15,000 in fees for a $400 loan.
"If I hadn't gotten caught in the payday loan trap, I would have had enough money to support myself and would be living more independently today," said Love.
Owens has introduced legislation he hopes will protect people like Love.
"More people have experienced this," said Owens. "More people in a debt trap, more people are aware of the unconscionable nature of these transactions."
The bill would cap payday lending at 36 percent.
"73 percent of the people in the Commonwealth are for a cap," said Owens citing a survey by the Kentucky Coalition for Responsible Lending co-chairs.
Owens says most disturbing is that more than 13 percent of transactions are from senior citizens who are using their social security checks as collateral.
"That is the most unconscionable aspect to me of this," said Owens.
The 600 plus stores employ thousands of people across the Commonwealth. Pat Crowley, a spokesperson for the Kentucky Deferred Deposit Association, says this bill would put most out of business.
"Our fees are very explicit," said Crowley. "Everybody knows up front it's about $15-17 per $100 you borrow. There's nothing predatory about that. People know what they get when they get in there. That's why we have almost 200,000 customers a year. They really need and want and use this product."
Love says she takes some responsibility, but sometimes there are emergency expenses.
"They're frantically looking for someplace where they can get help, and if they don't have family members who have got a lot of money and can help them out, you go to wherever you can find help," said Love.
The bill now has 26 sponsors including Rep. Greg Stumbo (D-prestonsburg), the Speaker of the House. Owens said he is not overly confident, but expects the bill will pass committee and go to the full House.