WICHITA, Kansas – It’s estimated that up to 50 million Americans rely on pawn shops for short-term loans. But if a bill now being discussed in Congress were to become law, stores heres in Kansas and across the country claim they could be forced out of business. But consumer groups say that’s nonsense.
Ruth Blackwell spent a part of her Tuesday at the Money Town Pawn Shop. She’s been under the gun financially many times in recent years and knows she can get a quick loan.
"On occasion, we have to come here, so we can help cover our bills,” she said. “Like today our phone bill. So, they help us out quite a bit."
But the folks at Money Town and at pawn shops across the county fear that if Senate Bill 500 becomes law, folks like Ruth and so many like her won’t be able to get help.
"Gas money to get to work to do their job,” said James Stewart at Money Town Pawn Shop. “Maybe their electricity bill for that month was a little higher than what they thought."
The bill would cap loan interest rates at pawn shops and pay day lending outfits at 36 percent annually. Kansas pawn shops are now able to charge a 120 percent yearly fee. Shop owners say the legislation unfairly targets them because pay day lenders charge three times that much.
The shop owners believe their fee is reasonable and is the only way they can cover their expenses.
But Sunflower Community Action Group here in Wichita, which for years has protested against high interest loans, says the legislation would protect millions of Americans from businesses it says takes advantage of already desperate folks.
"We are not out to close any one particular business,” said Rickie Coleman with SCAG. “We're out for consumer protection to save the people from the cycle of debt."
A cycle she believes pawn shops contribute to. Coleman says there are credit unions available to people like Ruth Blackwell that charge much lower interest rates. And she thinks it’s sad that Ruth and so many others have been led to believe this about pawn shops and pay day lenders.
