Sioux Falls, S.D. (KELO AM) - The nation's largest payday lender says a survey of its former borrowers in South Dakota shows severe hardships since the payday loan rate cap kicked in.
"Unfortunately, customers are now paying higher costs for their credit products, when they can get them, and they're forced to turn to illegal operators, as well," says Jamie Fulmer, Senior Vice President for Public Affairs with Advance America.
South Dakota voters approved a rate cap on payday loans in the November election and since then Advance America and many other short term lenders have stopped making such loans in the state.
Fulmer says that the survey shows that 58 percent of its former South Dakota borrowers are now forced to pay late fees and 53 percent are neglecting their bills. In addition, the survey shows that 40 percent did not fix a vehicle, and 37 percent did not pay a medical expense, when faced with money troubles due to a lack of short term lending.
"Taking away someone’s ability to borrow doesn’t erase their need for credit or relieve their financial obligations,” says Fulmer.
Supporters of the rate cap initiative claimed that payday lenders prey on the people who can least afford it. Rate Cap Activist, former Sioux Falls Pastor Steve Hickey has said that getting rid of payday lenders would benefit consumers because they won't be victims of crushing interest rates.