voting measure aims to protect against predatory lending practices | New
(Ralston) – If Nebraska Voters Approve Voting initiative 428 On Tuesday, payday lenders said most operators would be forced to close their doors, leaving Nebraskans with poor credit no alternative when they need emergency cash.
But supporters argue that charging more than 400% interest is predatory behavior that can trap families in a never-ending cycle of debt.
Aubrey Mancuso, Executive Director of Voices for the Children of Nebraska, said current payday lending practices expose the state’s most vulnerable families to increased overdraft fees, loss of bank accounts and even bankruptcy.
“Instead of relying on a borrower’s ability to repay, they rely on direct access to a person’s bank account,” Mancuso explained. “Lenders are paid before food, before rent, before any other basic necessities families need.”
Initiative 428 would cap interest rates at 36%, the same rate adopted by Congress for active-duty military families after reports that growing payday loan debt was impacting the state of military preparation.
Industry groups say 36% is not enough to compensate for the losses of people who cannot repay their loans.
Mancuso pointed out that some Nebraska residents are at greater risk of going into debt by lending payday.
“Many of our borrowers are single women with children,” Mancuso said. “Many of these facilities also target communities of color, especially veterans, people with high health costs, people with disabilities; older people as well.”
Mancuso noted that in the 16 states that have adopted similar protections, families are finding better short-term alternatives. They borrow from friends, use credit cards, or cut spending.
“What we find in the research is that families are opting for these other options which may not seem as convenient as a payday loan right now, but which ultimately leave them better off in the long run.” , added Mancuso.
The 428 vote initiative was launched after lawmakers in Nebraska decided not to pass similar protections in the legislature.