Kentucky Baptists Want More Regulations For Payday Loan Lenders

They want the interest rate to be capped at 36 percent. And while that is still quite a bit, it is much better than the nearly 400 percent that is currently being charged.

This type of bill has been proposed in recent years but fell short. However, the Kentucky General Assembly plans to reintroduce the proposal in 2012. The resolution being presented by the Southern Baptist Convention uses biblical versus as its foundation. It states that the Bible prohibits taking interest from those who are less fortunate. And that is exactly what a payday loan does. They say that Christian faith opposes this type of practice.

Those who criticize payday loan lenders say that they target the poor and get them into a never ending cycle of debt by giving out a series of payday loans. However the industry doesn't agree. They feel that these claims are completely false and misleading. They believe that capping the interest rate at 36 percent would end payday loan lending and deprive people from getting the short term credit they need.

The Kentucky Baptists pointed out that according to the Kentucky Coalition for Responsible Lending, the average person who takes out a payday loan ends up in debt for about 160 days. That's almost 6 months. Can you imagine how much interest is being paid during those 6 months?  This is how people get into a cycle of debt that they can't seem to get out of.

Several states are actually on the same page as Kentucky. They are trying to impose limits on the amount of interest being charged on payday loans. The federal government has already stepped in and restricted interest on loans to those in the military. Hopefully they will step in and protect other American citizens as well.

The Kentucky Baptists aren't alone in their quest to regulate payday loan lending companies. Other religious groups such as the Kentucky Council of Churches, Citizens of Louisville Organized and United Together and the Catholic Conference of Kentucky also oppose this type of lending practice. Let's see what happens when the bill is presented again in 2012.