Payday Loans Win Big in Louisiana

Jan 30, 2015

Payday loan regulation advocates will not be getting their way in the 2015 legislative year in Louisiana. For the last few years, consumer advocates have pushed for constraints on the number of payday loan companies in the state and the amount of interest these organizations charge. Consumer advocates tried, and failed, to point out that payday loans may hurt citizens more than they help – throwing them into long term cycles of debt. This perspective was not shared by the Louisiana state capitol, which decided to enforce protections for payday loan merchants in the state.

Over 300 out of 1000 payday lending organizations that exist in the nation, operate in Louisiana. Payday loan opponents believe that Louisiana is saturated with payday lending because these companies target low-income individuals who will have a difficult time paying back the money they will borrow – and instead wind up paying excessive amounts of money in penalties and interest.

When a customer takes out a payday loan, they usually only borrow a few hundred dollars. However, payday lenders give them only a short period to repay the loan. Usually, consumers must write a check for the cost of the original loan plus fees. This arrangement isn’t really scandalous, in and of itself, but more often than not consumers make multiple loans while being charged between $20 and $55 per transaction. Payday loan rates can reach as high as 700 percent annually.

Capping payday loan rates at 36 percent was one of the goals that consumer advocates wanted to meet. Democratic state Rep. Ted James, sponsored a bill that would cap interest rates at 36 percent last year. The bill also included a provision that limited the number of payday loans a person could take out in a year to only 10. The bill did not pass.

Louisiana is just one of many states whose consumers allow for savvy lender to take advantage of lender-friendly governments that protect your rights to own and operate payday loan companies. In order to increase your profits, your company will need a reliable payment processor to give your customers more channels to pay back loans with a payday loan merchant account.


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