Lt. Gov. Maxwell seeks competition for payday lenders

A law that went into effect Aug. 28 will help protect citizens from the abuses of payday lenders, according to a news release from Lt. Gov. Joe Maxwell's office.

Maxwell said the new law limits payday lending practices, but notes that the customer is not fully protected. Payday lenders may charge any simple interest or fees agreed to by the borrower.

Consumers can be charged fees of up to 75 percent of the initial loan amount and all renewals. Six renewals are allowed, which could accumulate up to 450 percent interest for borrowers.

"The law is a good first step, but we need to do more to educate consumers on alternatives for quick and cost-saving loans," Maxwell said.

Maxwell has asked that banks and credit unions help create competition against the payday loan companies.

"We have to create borrowing options for people in need," Maxwell said.

"Consumers will continue to fall victim to the exorbitant interest rates payday lenders charge if they have no other choice," he added.