Missouri House Passes Payday Loan Limits

The Missouri House on Tuesday passed legislation to eliminate renewals on payday loans and lower the amount of interest borrowers can charge.

Payday loans in the state currently can be renewed up to six times and borrowers cannot be charged more than $75 in interest and fees for a $100 loan.

The bill passed by the House not only eliminates renewals but also caps the amount in interest and fees at $35. It further allows a borrower to sign up for additional time to pay back a loan without penalty.

Supporters say the measure protects consumers from debt. But opponents argue it doesn't go far enough to curb irresponsible lending.

House members voted 112-39 on Tuesday to send the bill to the Senate, where a different version passed earlier. Lawmakers must agree on an identical measure by May 16.

The Missouri Senate's version removed the cap on the amount of interest a borrower can be charged.

Several states in recent months have passed or considered payday loan legislation. One of most recent involved a payday lending reform bill in Utah that the state's Senate approved. That legislation is under review by Utah Gov. Gary Herbert.

Last week, Louisiana legislators also advanced a proposal to limit the number of payday loans a borrower can take out each year, despite arguments that it will force storefront lenders to shut down.

Louisiana's Senate Finance Committee approved the proposal by Sen. Ben Nevers to put a cap of 10 payday loans per year per borrower. Payday lenders would be required to record transactions in a database to ensure the cap. The bill is headed to the full Louisiana Senate for review.