Payday loan providers and check-cashing outlets work as a substitute for conventional banking institutions by providing short-term loans and will charge effective interest levels of as much as 460 per cent, county officials stated. Board of Supervisors President George Shirakawa stated they passed the ordinance because such loan providers are “predatory” and target low-income residents.
Based on the Center for Responsible Lending, such financing companies are disproportionately based in African-American and Latino communities, county officials stated. Supervisor Mike Wasserman said he thinks payday that is such only drive borrowers deeper into debt.
“The high interest levels charged by payday loan providers entangle borrowers in a cycle that is vicious” Wasserman stated.
The board made a decision to make sure that lending that is payday check-cashing companies try not to transfer to the unincorporated county areas if San Jose along with other urban centers additionally pass comparable ordinances, based on Andrea Flores Shelton, deputy chief of staff for Shirakawa’s workplace. The San Jose City Council is planned to take into account one such ordinance May 15.
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“We did not wish those organizations transferring,” Shelton stated, incorporating that the payment just isn’t depriving them of current solutions, only limiting development.
Based on the board, there are many more than 2,000 payday loan providers in hawaii, exceeding how many Starbucks places. Of these, at the least 64 can be found in Santa Clara County.
In February, the board had paved just how for the ordinance by imposing a 45-day moratorium on payday financing and check-cashing companies into the county that is unincorporated.