Emergency loans through a local bank. But is it really that easy?

MISSOULA- At least 18 payday lending stores closed across Montana and more may follow after voters approved an interest rate cap.

Backers of I-164 say folks needing emergency loans can get them through a local bank. But is it really that easy?

On November 2nd, voters overwhelming approved an I-164. The very next day, National Quick Cash manager Kathleen Fiorino in Missoula says she stopped lending money.

"Our home office said we cannot make any new loans to our customers."

Fiorino's lights are still on, for now....but many payday loans stores have already closed due to I-164 and industry leaders expect their short-term lending business model to go bust by the end of the year.

"We stated over and over again that a 36% cap would close down the industry and now that initiative 164 has passed, people believe us."

Consumers in need of extra cash can get small-dollar, short-term loans from credit unions but the requirements for qualifying are more stringent.

Often you have to be a member for 90 days and earn twice as much as the amount you want to borrow.

Even if payday lending go away, the need for emergency cash will not. Bill St. John with Missoula Federal Credit Union says this could create a problem for people who can't get a credit union loan.

"If they do close down, there's going to be a vacuum there and it's going to create a need for that short-term cash."

It's estimated hundreds of Montanans could lose their payday loan store jobs, but Fiorino says the cap hurts her customers the most.

"It's heart-wrenching to look these people in the eyes and say I'm sorry I can't issue a loan, I can't help you with your short-term needs because of initiative 164."

The new 36% interest rate cap goes into effect on January 1st.

News source: kaj18.com

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