Payday loans don’t just affect the poor and working class of Kentucky, the high rates affect the military as well.
Kentucky payday lenders collected $ 117 million in fees in 2015. This comes from the $ 68 million they loaned, according to a new report from the bipartisan Kentucky Vulnerable People Task Force.
“I think payday loans are still one of those issues that we’ve never been able to solve,” said state representative Joni Jenkins, vice chair of the task force.
Dixie Highway, which is in the Jenkins district, has a myriad of check cashing businesses.
“And if you drive on Dixie Highway,” Jenkins said, “every minute you see a check cashing and payday loan transaction.”
She describes the interest rates of many of these lenders as “ineligible”.
Although it is not capped for civilians, the interest on payday loans for the military is 36%. According to the report, the average salary of a soldier is $ 30,000.
The task force recommends an annual limit of 36% for all borrowers. He advocates tighter restrictions on transactions that violate lending rules, including fines of $ 5,000 to $ 25,000 for lenders, per violation. Currently the fines are $ 1,000 to $ 5,000.
Perpetual offenders within the same year should abide by a “three strikes and you are out” law, as recommended by the task force.