New El Paso Ordinance For Payday Lenders
It's a new year so, here come some new laws.
Buzz Adams wrote a post on KLAQ.com about some new laws taking effect in Texas. There are also some going into effect here in El Paso, one of which deals with "Payday Lenders". Businesses that lend pretty much anyone money, usually at very high interest rates and with very high fees attached.
The new ordinance kicks in January 16th and requires lenders to register their business within 60 days, pay a registration fee and it caps how much people can borrow and how many times they can "refloat" the loan. According to the El Paso Times:
The adopted city ordinance, however, limits payday loans to 20 percent of the borrower's gross monthly income and auto-title loans to either 3 percent of the borrower's gross annual income or 70 percent of the vehicle value. The ordinance also limits the number of installments to four and roll overs and renewals to three. It also requires payday lenders to provide customers with a form referring them to credit counseling.
First of all, I am not a fan of these types of businesses. (In some cases, I think they do lend to people they know can't repay just to seize their collateral.) My issue with this new ordinance though is, since when does the city get to decide how a private business should be run?
If there are unscrupulous lenders out there, no one is forcing El Pasoans to borrow from them. If someone does enter into an agreement that they feel is unfair, they entered it. They agreed to the terms and conditions.
In short, they have only themselves to blame if it doesn't work out they way they wanted it to. Now, El Paso is once again taking the "Nanny State" approach to a problem. Since we can't stop people from doing dumb things ... and loans from these types of places are not exactly smart things to do ... let's eliminate their ability to do them.
Here's a thought. Why don't we, as parents, friends and family of people, teach them to save, work hard and not borrow money at all? If a loan is necessary, say for a home or a car, why don't we encourage them to go to a reputable bank with fair rates and less chance of losing their only possession(s) in the event of a problem?
Thus being good people and keeping the citys big azz nose out of our business!
What do you think?