The group, mainly sponsored by the Evangelical Lutheran Church of America, met with city council member Heidi Durand, who is stepping down this week, as well as Mayor Johnathan Judd and new state representative Heather Keeler, to salute the city’s efforts. Moorhead has significantly lowered the interest rate on payday loans from what Durand said on average from about 250% to 33% for the two Moorhead lenders.
“Moorhead is a model of what can be done,” said Durand. “We’ll take it on the road.”
She said several other cities in Minnesota had been in touch to learn more about the city’s program, the first of its kind in the state.
In addition to limiting the interest rate, the city’s program limits fees, limits the number of loans to two under $ 1,000 per year, requires repayment within 60 days, and also asks for detailed details of all. fees as well as annual reports from lenders to the city.
The program was passed by city council last fall and has binding on the city’s two lenders – Greenbacks at 819 30th Ave. S. and Peoples Small Loan Co. at 1208 Center Ave. – to close shop.
A call to Greenbacks, which says on its website that its hours are unknown but still has a phone number, was not returned on Wednesday. A sign for the company can always be found outside the office building.
In a public hearing on the plan before its adoption, Chris Laid and his brother, Nick, of Greenbacks Inc. were the only residents to object. They owned the business with their father, Vel.
Nick Laid wrote that if the law passed it would likely bankrupt them and lead people to Fargo where interest rates are higher.
“Many people who use short-term consumer loans already have limited access to credit, either because of poor credit, lack of credit, lack of collateral or lack of community support structures. such as friends or family, ”added Chris Laid.
Durand, who has been researching and leading the matter for years, said lenders demand payment due within two weeks, or fees go up immediately if the loan can’t be repaid.
Many credit card companies are surviving on interest rates well below 33%, she said.
She said Moorhead’s program is similar to the North Dakota state program, while Minnesota’s regulations are not as restrictive as the city’s.
Minnesotans for Fair Lending is in the process of building a website and has a Facebook page where it calls payday loans a “predator” that puts borrowers in a debt trap with triple-digit interest rates.
Durand has repeatedly praised the nonprofit Exodus Lending in Minnesota which has a 99% success rate in getting borrowers out of payday loan debt.