Payday loans gone, but need for quick cash remains

For 15 years, South Dakota residents who needed a small amount of money in a hurry could turn to storefront lenders who made so-called payday loans at annual interest rates that could rise well over 500 percent.

The industry thrived, and payday lending businesses that made loans on a weekly or monthly basis popped up by the dozens across the state.

But in late 2016, after a heated campaign that highlighted how some borrowers got trapped in a cycle of paying excessive interest and fees, South Dakota voters overwhelmingly approved a measure limiting the annual interest rate on short-term loans to 36 percent.

The new rate was a deadly blow to the industry. When the 36 percent annual rate is applied to loans made only for a week or a month, it made payday loans unprofitable.

Read more: http://www.capjournal.com/news/payday-loans-gone-but-need-for-quick-cash-remains/article_4b3b74de-2e5e-11e8-8dc5-c7f64085e760.html