Short term lenders bail on states after initiatives pass

Montana is now nearly a short term loan-free zone. After the state's voters passed an initiative in November that capped interest rates at 36 percent, nontraditional loan sources have been leaving in droves. Many lenders left the state immediately following the vote, according to the Missoulian. Others have abandoned the state after the new year, when the regulations became law. "Nobody's going to make loans under 36 percent," Steven Schlein, spokesman for the Community Financial Services Association, told the news source. The publication decided to investigate this claim for itself and found that, of the 10 short term lenders in Missoula, Montana, seven had already left. According to the Billings Gazette, 102 businesses were giving out short term loans in the state of Montana at the beginning of 2010. But when the Montana Division of Banking and Financial Institutions sent out notices to remind lenders that they had to renew their annual licenses by December 1, there were just 82 short term lenders. Of those, only 30 renewed their licenses. With the vote results in November, Montana became the 17th state to pass a law or initiative that curtails the rates on short term and car title loans.