State Represntative Daryl Owens wants to impose a rate cap on cash advance loans in the state of Kentucky. Currently interest rates can be anywhere between 300-400% a year. Owens filed House Bill 381 Monday which calls for a rate cap of 36% a year.
Joining Owens in the effort is the Kentucky Coalition For Responsible Lending and 50 other non-profit organizations. They claim payday loans with high interest rates create a "debt trap" that loan takers cannon escape.
A lobbyist representing the cash advance businesses, Scott Jennings, claims if the rate cap at 36% percent is enacted cash advance businesses would have to close. However, 15 other states have created rate caps or eliminated interest rates completely. In Ohio the rate cap is 28% and businesses continue to operate there.