Decatur board approves resolution calling for tougher restrictions on payday lenders and auto title lending

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Payday loans

Decatur City Council on Tuesday night approved a resolution that calls on state lawmakers, Congress and the Consumer Financial Protection Bureau in Washington, DC to consider tougher regulations for payday lenders and securities lenders automobiles. (File photo)

DECATUR, Alabama – Decatur City Council on Tuesday night approved a resolution calling on state lawmakers, Congress and the Consumer Financial Protection Bureau in Washington, DC to consider tougher regulations for payday lenders and lenders of titles.

The document calls on state and federal leaders to consider enacting legislation or policies that tighten the rules for payday loan / advance and car title businesses, which are strewn in clusters on both sides of the main hallway. the city on Sixth Avenue.

Whether such ventures harm the city’s image has been a hot topic for years at Decatur, which currently has a 180-day moratorium in place to stop the issuance of new licenses to high-interest loan companies. until February.

Introduced by Decatur’s Director of Economic Development and Planning Wally Terry, the two-page resolution passed 4-1 with longtime District 1 Councilor Billy Jackson placing the only dissenting vote. Terry said the resolution will have no immediate effect on existing businesses at Decatur.

Jackson, who has said he fully supports an interest rate cap that prevents residents from being “scammed”, voted against the resolution over fears it could potentially force local payday lenders to close their doors. .

“If these guys go bankrupt and the people who need to have the money can’t get these loans, they’ll go to a loan shark or whatever, and the rate will be vastly higher than with these payday loans,” he said. he said. “It’s a tough decision.”

Jackson, whose district has the lowest per capita income in Decatur, said he believes the council’s concern about payday lenders goes beyond mere concern for the well-being of our citizens.

“I think it goes beyond that for this advice,” he said. “… I don’t disagree on the rate issue, but I don’t know what we can do without putting these guys out of business. I think there must be options out there.”

The resolution states that “many of these companies use business practices which often are not based on the borrower’s ability to repay the loan, do not use credit reports, and do not report the transaction to the credit bureau. credit”.

Such transactions could lead to “unfair, deceptive and abusive practices normally only found in predatory lending programs”, and create a perceived negative image of the city of Decatur, according to the resolution.

When Chuck Ard ran for his seat on the board last year, he said he had visited over 2,500 homes during his campaign, and that the subject of payday loan and lending businesses. titles had returned several times among his constituents.

“These companies provide a service to society, this service being intended for people who have difficulty obtaining loans from conventional methods, ie banks,” he said. “What we want is that if you come in and need the money, that in plain English you understand what you are getting and that you are not taken advantage of. The second thing is to stop the escalation of interest. “

Bob Lewis, owner of Mid-City Pawn in Decatur, urged council in a business meeting Tuesday night to rethink the resolution’s approval.

Lewis, who said he had never given a poor person a payday or title loan, said he mainly works with middle-class residents who need quick cash for emergencies and other special cases, such as when their transmission is interrupted or their daughter needs braces.

“I understand the concerns on both sides about this, but until you have experienced it, looked through and listened to the stories that I am listening to, you need to think before you act,” he said. “What they do in another state, just because it’s good there, doesn’t mean it’s good in Alabama.”

Lewis said the interest rate cap would bankrupt businesses like his, forcing residents to explore other ways to make money, such as loan sharking, theft or “whatever they like.” must do to get it “.

Alabama Arise organizer Robyn Hyden came from Birmingham to attend the working session and board meeting in support of the resolution from Decatur’s planning department.

“Predatory lending is an issue we’ve been dealing with for many years because it’s just unfair – the rates charged,” she said. “Our evidence suggests that a lot of poor people use payday loans and use them for their daily expenses. They are trapped in this cycle of paying and paying and paying. We just think there might be other regulations. “

Don Gowen, a Decatur native and 50-year veteran in the consumer lending industry, said “a small loan to a deserving person is not a bad thing.”

“The 17½ percent is fine if it’s one loan, but if you translate that into what’s going on, they’re putting these people in debt and having to pay 10. and 12 and 15 of those loans for a year, and blowing it they’re going to pay about 456% interest. “

Gowen, a member of the Alabama Consumer Finance Association, said that until someone takes a “courageous stand” against predatory high-interest lending companies, the city will continue to see “more up-and-down billboards. down Sixth Avenue and across town ”.

The board will meet in the coming weeks to discuss potential zoning requirements for payday lenders and title lenders who charge high interest.

At Tuesday night’s meeting, the board also approved a resolution to extend for one year a $ 720,000 grant from the Alabama Department of Transportation that would be used to renovate the centrally located L&N Railroad depot. -city.

Council Chairman Gary Hammon said a working session will be held later this month to give the public an opportunity to talk about the draft filing ahead of the final vote in January.

Send an email to Lucy Berry at [email protected]


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