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Payday Lenders Close Operations In Montana

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Payday Lenders Close Operations In Montana


Payday Lenders Close Operations In Montana

Payday Lenders Close Operations In Montana

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

There's a new cap on how much interest payday lenders in Montana may charge. Voters there approved the measure earlier this month. Now, the payday loan industry says hundreds of jobs will be lost. Consumer advocates say the new law will help poor people.


In Montana, dozens of payday lenders and chains specializing in consumer loans are shutting down. Voters there recently approved limits on how much these lenders can charge people on their loans. Montana joins 15 other states, plus the District of Columbia, in approving similar interest rate caps.

Montana Public Radio's Emilie Ritter reports.

(Soundbite of typing)

EMILIE RITTER: Casey Gifford is the manager at Noble Finance in Helena.

Ms. CASEY GIFFORD (Manager, Noble Finance): Good dad, you are.

(Soundbite of laughter)

Unidentified Man: Wow.

RITTER: Noble is a national consumer loan chain, with 11 stores in Montana. They specialize in short-term, high-risk loans, which come with hefty interest rates. At Noble, a $100 loan will end up costing the borrower just over 170 bucks. That interest rate is more than 300 percent. The new law caps the annual percentage rate at just 36 percent.

Ms. GIFFORD: With the amount of loans that we make for the amount - you know, $100 loans, $200 loans, $300 loans - at 36 percent APR, we can't make enough money to keep an office going and pay staff and re-loan money. It just - can't do it.

RITTER: So Noble Finance is closing all of its Montana stores.

Ms. GIFFORD: I'm going to be on unemployment and looking for a job. And that's scary right now, because there's not a lot of jobs out there, and I know people have had issues with getting unemployment. So that - yeah, that's a little worrisome.

(Soundbite of laughter)

MS. GIFFORD: Definitely. I have to take care of myself and my daughter.

RITTER: She says managers like her make a decent wage, plus benefits. Montana voters overwhelmingly supported the interest rate cap. Still, Bernie Harrington, who ran the opposition to the initiative, says people didn't understand what they were voting for.

Mr. BERNIE HARRINGTON (President, Montana Financial Service Centers Association): I think it looked prejudicial. It wasn't very explanatory to the voter. The type of advertising that was engaged in by the proponents, I think it was just an uphill battle. And I think - unfortunately, I don't think the voters clearly understood the industry.

RITTER: He thinks all the payday car title and consumer lenders which offer only short-term loans will end up closing, estimating anywhere from 400 to 600 jobs lost. Harrington's number is a very rough estimate. North Carolina-based Center for Responsible Lending has been advocating for interest rate caps all over the country. Vice President Uriah King says those jobs do more harm than good.

Mr. URIAH KING (Vice President, Center for Responsible Lending): For every person - for example - payday lenders employ, there's almost 200 people in the debt trap. So in other words, you know, these jobs come at a real cost.

RITTER: He says consumers who take out these short-term loans get trapped in a cycle of repeat loans.

Mr. KING: Those are people that are spending money at the payday loan store and not at the grocery store, and not paying their rent on time, and not getting the medicine and food and other things that they need. That money is going towards floating that same $300 or $400 every month.

RITTER: King says there are other options for people who need short-term cash -credit cards, for one. And according to a weekly rate report on, the average APR for a new card is just over 14 percent.

Ms. GIFFORD: No, she never did. I talked to your wife...

RITTER: Back at Noble Finance, manager Casey Gifford says credit cards and traditional banks aren't viable options for many of her customers.

Ms. GIFFORD: They're all telling me that they've tried the banks. They can't get the help, and they don't know what they're going to do. They have nowhere to turn now. I've been through a lot of tears and a lot of anger, and I feel bad. There's nothing I can do to help them.

RITTER: Some states have outright bans on short-term loans. Others have capped interest rates even lower than Montana's 36 percent. Arkansas is the lowest, at 17 percent.

For NPR News, I'm Emilie Ritter in Helena.

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