Payday loan providers and check-cashing outlets behave as a substitute for conventional banking institutions by providing short-term loans and that can charge interest that is effective 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.
In line with the Center for Responsible Lending, such financing companies are disproportionately situated in African-American and Latino areas, county officials said. Supervisor Mike Wasserman stated he believes payday that is such only drive borrowers deeper into debt.
“The high interest rates charged by payday loan providers entangle borrowers in a vicious period,” Wasserman stated.
The board determined to ensure lending that is payday check-cashing companies usually do not transfer to the unincorporated county areas if San Jose as well as other towns and cities 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 think about 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 growth that is limiting.
In accordance with the board, there are many than 2,000 payday lenders in their state, surpassing the sheer number of Starbucks places. Of the, at the least 64 are found in Santa Clara County.
In February, the board had paved the way in which for the ordinance by imposing a 45-day moratorium on payday financing and check-cashing organizations within the unincorporated county.