For those struggling to make ends meet, payday loans sometimes can be the only option for fast cash.
However that quick money can haunt you for a while as many people can't seem to get out of the cycle from taking these loans out-and the skyrocketing interest rates to pay it back.
In Nebraska, payday loans can range from 100 to 500 dollars and sometimes just two weeks to pay it off.
But the annual percentage rate to pay them off can be over 450-percent.
For some, that causes them to spiral into more and more debt like Diana LaCroix has a hard time making ends meet.
“Times aren’t easy now,” said LaCroix.
LaCroix says ever since her husband died two years ago—the money is not there—and the bills stack up.
“His income was so much more than what I’m getting right now,” sai LaCroix.
So last august lacroix had to take out a couple payday loans—trying to pay her high property taxes of 12-hundred dollars, supporting her 18-year old grandaughter while keeping the lights on.
“I needed the money to pay bills,” said LaCroix.
But LaCroix found out quickly, she was stuck in the whirlpool of trying to pay off these loans while not making enough to pay them off fully, “Every month I have to take it out and I pay them back and i have to take it out again in order to pay my bills.”
Senator Tony Vargas is introducing a bill to help people like LaCroix out, LB 194 aimed at stopping the payday lenders from charging high rates and a reasonable pay off-schedule.
“What it ends up doing is putting them in a cycle of debt that sometime a $500 loan can turn into a $5,000 loan really quickly and that’s not what we want to happen to consumers.
Under this bill according to Sen. Vargas, the APR will be capped at 36-percent,while the monthly payments will be 5-percent of your gross income.
“This makes sure that whatever you are paying every month no matter how long is still affordable and not putting you deeper into debt,” said Vargas.
LaCroix warns others to beware of the these quick fixes—because you may be asking more than you bargained for.
“It’s like highway robbery, I mean they are robbing the poor-what they are doing, they are prying on the most vulnerable people,” said LaCroix.
The hearing on this bill is scheduled for February 21st at the Capitol.
To view the bill click here: http://www.nebraskalegislature.gov/FloorDocs/105/PDF/Intro/LB194.pdf
