Are payday loans too difficult to pay?

KANSAS CITY, Mo. - Missourians could decide in November if the interest rate on payday loans bails out or bankrupts the people who get them.         

Petitioners want to lower the interest rates on payday loans.

They argue Missouri has some of the loosest laws in the nation.

Thousands of people have signed petitions to get interest rates on short term loans capped at 36 percent, the federal government's estimate of a fair rate.
      
Payday loan companies in Missouri can now charge as much as 1,950-percent interest.

Many 41 Action News found were around 400 percent.

People, like Elliott Clark, said that makes it nearly impossible to ever pay the loan back.

He was one of those who took out several pay day loans and slid even deeper into financial trouble.

Clark lost his home several years ago after he failed to keep up with the interest rate on $2,500 worth of loans.

"Over the course of time, there was $30,000 in interest," Clark said. "This was over a four year period of time. $30,000? I could have paid off my house."

Clark is now free of his payday loans but is on a mission to get a pay day loan question on a statewide ballot in November.

He also volunteers his time at a local food pantry.

Clark said he is hearing from more people who are falling on hard times partly due to the loans they are not able to pay back.

"People need a loan," Clark said, while loading grocery sacks. "They don't want a handout for free. Most people just need a loan to make ends meet."
      
But some lenders who did not want to be quoted said they help a lot of people with poor credit and little money that other lenders would never take a risk on.

They have argued capping interest rates on pay day loans would kill the industry in Missouri, leaving many people of all races and economic backgrounds with nowhere to go.
 
"But that's taking advantage of people in a desperate situation," Jude Huntz, with Catholic Charities, said.

Damon Daniel with Communities Creating Opportunities, gave this analogy: "It's like everyone should have a father in the household but if he's abusive then we don't need him. It's the same thing. Yes, we need access to quality loans but not abusive loans that take advantage of people."
    
Clark said his volunteer work at the food pantry is a way to pay back the friends and churches who once gave him help.
       
"That's the kind of loan that makes a lot more sense and one I can afford to pay back," he said.
       
The Missouri Secretary of State must certify petition signatures by August to get the payday loan question on the November ballot.