House committee hears both sides of title loan issue

Speedy Cash executive Thomas Steele testified Wednesday there was no reason to impose new restrictions on businesses making loans to people using vehicles for collateral.

He said the company's loan offices in Wichita, Hutchinson and Salina provided a handy service to anyone needing a quick infusion of cash.

Wichita resident Lori Lawrence countered during the House Federal and State Affairs Committee hearing that title loan firms were predatory lenders who squeeze customers hooked on debt.

"This used to be called loan-sharking," she said.

The House committee gathered testimony from supporters and opponents of a bill setting a maximum interest rate of 36 percent on title loans in Kansas. That is identical to the percentage cap implemented by Congress for military personnel.

Chairman Arlen Siegfreid, R-Olathe, said he had no immediate plan to bring the bill to a vote in committee.

Rep. Melody McCray-Miller, D-Wichita, said she became a key sponsor of the bill to create a reasonable limit on interest paid by title loan borrowers.

The bill has been stuck in House committees for a year, and McCray-Miller said the full House should be given an opportunity to act on the measure.

"We are once again talking about consumer protection," she said.

Emilie Burdette Rush, an assistant attorney general for Kansas, said consumers were vulnerable under existing Kansas law because a person's expensive automobile could be seized and sold upon default on a relatively small loan.

The bill requires that upon default the lender can sell the vehicle but must refund to the borrower within 30 days proceeds from the sale that exceed principal, interest and expenses due the lender.

The annual percentage rate for Speedy Cash loans stands at 240 percent, Steele said. He said APR wasn't a good way to evaluate title loan fees because the short-term loan is intended to be repaid in weeks or months rather than years.

"We're a company that loves our customers," said Osjha Anderson, representing LoanMax. "We charge what we charge because that's the economic reality of it."

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