News & Resources

Support grows in Iowa for short term loan reform

Jan 31, 2011 Todd Milner

Many states are currently taking action or have already passed laws regulating the short term loan industry, and it looks like Iowa will soon join them. According to Iowa Politics, a new poll has revealed that 69 percent of the state's residents are interested in capping short term loan interest rates. Nearly seven in 10 Iowa citizens support a change in state law that would lower the annual interest rates on short term loans. Additionally, 79 percent of respondents said that they support rate caps, even though short term lending reform would lead to reduced access to credit for consumers and short term loan store closures throughout the state. The poll of 407 registered Iowa voters was conducted in mid-December. Although a loan rate cap is seen as a consumer-friendly move, the regulations essentially put short term lenders out of business, eliminating a much-relied upon form of credit for many people. The lending rates involved in short term loans, often at several hundred percent, can seem daunting when spread over the length of a typical bank loan. However, these interest fees are based on short-term loans that usually total $100. Often, short term lenders charge just $15 per every $100 loaned.