The initiative to crack down on payday and title lenders will remain on the Nov. 2 ballot, a state district judge ruled today, rejecting charges by payday lenders that Initiative 164 signature-gatherers violated the law.


District Judge C.B. McNeil of Polson said a coalition of payday lenders failed to show that any illegal petition signatures affected the qualifying of I-164 for the general election ballot.


I-164 limits the annual interest rate that payday and title lenders can charge, to 36 percent.


Owners of the companies that offer these short-term loans say the initiative, if passed, will essentially put them out of business, because they can’t make a profit with an interest rate that low.  


Spokesmen for the lending companies couldn’t immediately be reached for comment after this morning’s decision.


Supporters of I-164 say lenders charge annual interest rates ranging from 300 percent to 650 percent on short-term loans, and that the lending firms seek to keep their customers perpetually in debt by taking out successive loans.


A coalition of lenders filed suit in August, alleging widespread violations by I-164 signature-gatherers as they attempted to qualify the measure for the ballot.


The lawsuit said signature-gatherers were rewarded monetarily for gathering more signatures, which violates the law, made misleading statements about the initiative, improperly notarized the petitions and did not attach a full text of I-164 to the petitions.


McNeil rejected those arguments, saying the lenders presented no evidence to show that the violations occurred or affected the final signature count. He also said that signature-gatherers’ statements about I-164 while trying to persuade people to sign the petitions is “core political speech” protected by the First Amendment.


Payday and title lenders in Montana offer loans that are usually for two-week or monthly periods, and can charge a fee or interest of up to one-fourth the amount of the loan. They wrote about $45 million worth of loans in Montana in 2009.


(2) comments


I'm afraid that this initiative will put lenders out of business and people out of jobs. While a 36% APR sounds reasonable, it is irrelevant when applied to a two-week small-dollar loan (these are not thousands of dollars loans!) Payday lenders will be forced to close, because they won't be able to sustain their businesses. They aren't backed by the fed, so there will be nobody to bail them out if they go bankrupt. The borrowers will end up paying higher fees in overdrafts and credit card charges.


It might put some burglars and thieves out of jobs. Of course, I am primarily referring to the folks who cannot compete by any other way than to gouge desperate lenders for the equivalent of 300-600% interest on loans. But there is another group who may also find a new line of work - I strongly suspect that these desperate borrowers who have no other option in repaying their outrageous loans aside from turning to crime.

I am a big believer in competition. Visa, Mastercard, Am Ex, etc do unbelievably well by their "bleeding heart" rates of 10% or 20% (or 30% for riskier buyers). I haven't seen these national credit companies folding, even though they provide vastly more cash advances than do these streetfront shysters. Let the payday lending industry compete. Perhaps you will find (as Purple suggested in another forum) that in offering lower rates, more people will do business with these payday lenders because they compare more favorably with the national credit card companies.

Sorry but I have nothing but crocodile tears for these lenders.

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.