Group says survey backs cap on payday loan interest rates
[anvplayer video=”5051065″ station=”998130″]
A group calling on the Minnesota Legislature to cap payday loan interest rates says a new survey shows Minnesotans are in favor of their proposal.
Data from the Minnesota Department of Commerce shows the average interest rates on payday loans in 2020 was 208%. The poll by Emerson College, commissioned by Minnesotans for Fair Lending, found 71% of respondents believe 200% interest for a loan is "not fair at all."
The coalition of community and faith groups is calling for the interest rate to be capped at 36%.
"People take out loans for all sorts of reasons. They may borrow $300, $500 mostly for groceries or rent or things like that. But what happens is they can’t pay them back in the two weeks that they’re due. So they re-borrow a loan to pay off the first loan, then re-borrow a third to pay off the second — and they keep doing this over and over. And they get stuck with the loans because of the high interest rates they’re being charged,” said Sara Nelson-Pallmeyer, the Executive Director of Exodus Lending.
The poll found 60% of Minnesotans support a 36% interest rate cap on payday loans. Some who did not support the idea said they were opposed to the measure because they feel the cap should be lower.
![](https://www.wdio.com/wp-content/uploads/2021/08/wdio_mgninterestratespercentage.jpg)
The findings were presented at a news conference in Duluth on Tuesday.
18 states plus Washington, D.C. have already capped payday loans at 36%. Regionally, Moorhead, Minnesota, recently passed an ordinance to cap the loans at 33%.