Payday loan providers and check-cashing outlets behave as a substitute for conventional banking institutions by providing short-term loans and that can charge effective rates of interest all the way to 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 residents that are low-income.
Based on the Center for Responsible Lending, such financing companies are disproportionately positioned in African-American and Latino communities, county officials stated. Supervisor Mike Wasserman stated which he thinks payday that is such only drive borrowers deeper into debt.
„The high interest levels charged by payday loan providers entangle borrowers in a cycle that is vicious“ Wasserman stated.
The board made a decision to ensure payday financing and check-cashing companies try not to transfer to the unincorporated county areas if San Jose as well as other towns and cities additionally pass comparable ordinances, in accordance with Andrea Flores Shelton, deputy chief of staff for Shirakawa’s office. The San Jose City Council is planned to think about one ordinance that is such 15.