Editorial: Predatory payday loans

Wednesday, April 20, 2005 | 9:26 a.m.

In a lengthy story published March 6, this newspaper exposed the consequences of the 1984 decision by the Legislature to repeal a law that limited the finance charges on consumer loans. The action helped lure a Citicorp credit-card processing center to Las Vegas, but set the stage for payday loan companies to take advantage of their customers.

There are nearly 400 payday loan companies in Nevada now, and interest rates, particularly for those customers who are late with their payments, often balloon to more than 100 percent. And it's not unusual to hear of customers weighted down with interest rates in the 1,000 percent range. Many people with bad credit turn to these companies, and, without the protection of government regulations, find themselves quickly owing more than $1,000 in fees and interest charges for a $250 loan.

Assembly Bill 384, sponsored by Assemblywoman Barbara Buckley, D-Las Vegas, would limit the interest on defaulted loans to the prime rate plus 10 percent. And Assembly Bill 340, sponsored by Assemblywoman Chris Giunchigliani, D-Las Vegas, would allow local governments to restrict the number of payday loan companies within their jurisdiction.

We support both bills. The payday loan companies have had two decades to police themselves and ensure against predatory practices. They wouldn't do it. Now it's time for the government to do it for them.