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In the first part of 2008 the Attorney General in Arkansas put a stop to the availability of payday loans. This started a series of court battles regarding the state’s constitutionality of the state usury limits. The Arkansas constitution sets limits to the amount of interest consumers can be charged at 17%.
When the Attorney General stopped the availability of payday loans, the state also told providers of payday loans to stop making new loans as well as to terminate all collection activities. Providers of payday loans have an uphill battle trying to change the State of Arkansas’s constitution.
Even if the providers manage to move this battle to the U.S. Supreme Court they might still get set back by a Federal law working its way through Congress and the Senate. The proposed Federal law would cap interest rates at 15%. If this bill passes it is sure to start a battle that will take years to resolve.
The proposed bill will also cap interest rates on credit cards at 15%, which would be good for consumers. Many of the national financial institutions will surly put up a fight to prevent this bill from passing, especially with the economy in recession.
Too much of the media’s coverage recently has been on the state of the economy, but if more Americans would contact their congressman and senator this bill might get the coverage it needs before it goes up for vote.
No matter how many law suits are brought before Arkansas’s court system, the process of changing the state’s constitution will be difficult. All providers of payday loans can hope for is to take their cases to the Supreme Court before the laws are changed on a federal level.
Regardless of the final outcome, consumers will end up better educated and safer from unfair lending practices. The days might just be numbered for providers of payday loans that charge triple digit interest rates to the people that can least afford it. With all of the avenues of lending embroiled in the recent financial crisis, many of these expensive payday loans might start to dry up to make way for safer types of loans.
Arkansas Payday Loans
Payday loans can cause people to get into worse financial problems in states that do not have strict laws to protect them from unfair fees and interest rates. Some states have put in place limits to the amount of interest providers of payday loans can charge. Arkansas is one of only a handful of States that has laws in place to protect people from getting farther into debt with payday loans that charge excessive interest rates.In the first part of 2008 the Attorney General in Arkansas put a stop to the availability of payday loans. This started a series of court battles regarding the state’s constitutionality of the state usury limits. The Arkansas constitution sets limits to the amount of interest consumers can be charged at 17%.
When the Attorney General stopped the availability of payday loans, the state also told providers of payday loans to stop making new loans as well as to terminate all collection activities. Providers of payday loans have an uphill battle trying to change the State of Arkansas’s constitution.
Even if the providers manage to move this battle to the U.S. Supreme Court they might still get set back by a Federal law working its way through Congress and the Senate. The proposed Federal law would cap interest rates at 15%. If this bill passes it is sure to start a battle that will take years to resolve.
The proposed bill will also cap interest rates on credit cards at 15%, which would be good for consumers. Many of the national financial institutions will surly put up a fight to prevent this bill from passing, especially with the economy in recession.
Too much of the media’s coverage recently has been on the state of the economy, but if more Americans would contact their congressman and senator this bill might get the coverage it needs before it goes up for vote.
No matter how many law suits are brought before Arkansas’s court system, the process of changing the state’s constitution will be difficult. All providers of payday loans can hope for is to take their cases to the Supreme Court before the laws are changed on a federal level.
Regardless of the final outcome, consumers will end up better educated and safer from unfair lending practices. The days might just be numbered for providers of payday loans that charge triple digit interest rates to the people that can least afford it. With all of the avenues of lending embroiled in the recent financial crisis, many of these expensive payday loans might start to dry up to make way for safer types of loans.
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