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Short term lending outlets axed in Montana

Dec 30, 2010 Todd Milner

Short term lending outlets and their nontraditional credit offers will soon be a thing of the past in Montana, thanks to a voter initiative that limits interest rates to 36 percent. The new measure begins on January 1 and already short term lenders are planning their exits, the Missoulian reports. The outlets began their getaway after the new rules passed during November elections. Currently, just three of the original 10 short term lending centers remain in Missoula. Those in favor of curtailment argue that the lenders can become predatory, taking advantage of senior citizens and others on fixed incomes with their high interest rates. "There are some businesses we don't want operating in this state," said Sheila Rice, executive director of the advocacy group Neighborworks Montana, based in Great Falls. The group argues that some lenders ensnare consumers in a cyclical trap of debt due to ballooning interest rates that must be paid back for relatively small loans, some no more than $100. According to the Missoulian, Montana became the 16th state to either limit interest rates on short term loans or ban the businesses altogether.