Kentucky gov renews call for cap on payday loans

AP News
Posted: Dec 16, 2009 10:48 AM

Kentucky Gov. Steve Beshear is renewing his call for lawmakers to put a cap on the amount of interest payday lenders can charge customers.

Beshear called Tuesday for a limit of 36 percent on the interest charges that in some instances now exceed 400 percent on an annualized basis.

Beshear said thousands of Kentuckians who have fallen on hard times are turning to payday lenders to put food on the table.

The 36 percent cap is consistent with the limit the federal government imposed two years ago on loans to military personnel and their families.

The General Assembly approved a moratorium earlier this year to prevent new payday lenders from opening in Kentucky. The state now has 743 payday lenders.

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Tres Watson, spokesman for the Community Financial Services Association of America, an industry group of payday lenders, said a cap will drive lenders out of business.