Short term loans and the government

Municipalities all over the United States are seeking to put restrictions on the levels of interest that short-term financing companies can put on those borrowing money. The issue has put those in the industry at odds with those in government, with each side saying that the other is acting irresponsibly. All the while, many find that the financing option a great way to get a loan when they can't obtain one from traditional bank or other institution. In one recent case, the city of Bloomington, Illinois, sought to put limits on the rates that short term lenders could charge to its customers. WJBC-FM reports that alderman from the city will likely make new rules, though no official action was taken at its most recent meeting. One of the most heavily involved groups leading to the coming action is Illinois People's Action, which brought a number of its supporters to the city council's chambers. The move to curbing the rates would make the Bloomington the first city in the state to enact rules. Bloomington Mayor Steve Stockton said that the governmental body was studying the issue carefully and taking its time because members wanted to make sure that didn't "make a misstep." According to the Illinois attorney general's office states that some short term installments can leave consumers with an APR as high as 400 percent. The office also states that a provision signed into law in March reduced issues some faced. "Under a new law that began on March 21, 2011, Illinois consumers now enjoy stronger protections from the short term loan industry’s worst practices. The new law protects consumers from unlimited roll-overs and requires loans to be based on a borrower’s ability to pay. The new law also creates a new type of loan – the small consumer loan– that is somewhat less expensive than the traditional short term product. While some have called on more government action when it comes to short term loans, many consumers who are unable to get funds from traditional lending sources often rely on them to get access to cash immediately. It is up to individual cities and towns and sometimes states to decide what type of rules to put in place.