New county ordinance to restrict payday loan providers. Santa Clara County Board of Supervisors passes ordinance to block check-cashing companies

Santa Clara County Board of Supervisors passes ordinance to block check-cashing companies

The Board of Supervisors passed an ordinance Tuesday evening, May 1, that obstructs payday loan providers and check-cashing companies from starting brand new branches into the unincorporated regions of Santa Clara County.

Payday loan providers and check-cashing outlets behave as an alternative solution to conventional banking institutions by offering short-term loans and certainly will charge interest that is effective all the way to 460 %, county officials said. Board of Supervisors President George Shirakawa stated they passed the ordinance because such loan providers are “predatory” and target residents that are low-income.

In accordance with the Center for Responsible Lending, such financing companies are disproportionately positioned in African-American and Latino areas, county officials said. Supervisor Mike Wasserman stated which he thinks such payday advances only drive borrowers deeper into debt.

“The high interest rates charged by payday loan providers entangle borrowers in a cycle that is vicious” Wasserman stated.

The board made a decision to make sure that lending that is payday check-cashing organizations usually do not transfer to the unincorporated county areas if San Jose along with other urban centers additionally pass comparable ordinances, relating to Andrea Flores Shelton, deputy chief of staff for Shirakawa’s office. Continue reading

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