Thursday, December 23, 2010
COLUMBIA, S.C. (AP) -- A South Carolina law barring people from taking out more than one payday loan at a time has led borrowers to seek other loans that advocates for the poor also call predatory.
Those alternatives include unsecured 6- and 12-month loans that come with high interest rates, or loans that require a car title as collateral. The loans often are made by companies that used to offer payday loans but have changed their business in the wake of the new law.
The Center for Responsible Lending says that those types of loans and the payday variety trap poor borrowers in a downward financial spiral of expensive credit. Lenders defend themselves and say they offer a service borrowers need.
Outstanding payday loans declined about 10 percent during 2009 as 245 locations closed.
(Copyright 2010 by The Associated Press. All Rights Reserved.)