KLAS-TV Channel 8 News Las VegasState Warns People of 'Pay-Day' Loans

State Warns People of 'Pay-Day' Loans

(Oct. 27) -- The Nevada Attorney General's office is warning residents about what he calls "pay-day" loan businesses. Thousands use these companies every year, but authorities say it is "not uncommon" for customers to be gouged with 400-percent interest rates.

And if you think 400-percent interest rates are bad, consider this: Clark County officials say they've seen rates as high as 1,300-percent. Some say these companies offer zero benefit to the community, while others say it's a case of a few bad businesses ruining the reputation of many.

It is the lure of the almighty dollar. And there are hundreds of "pay-day loan" companies, seemingly at every corner, willing to give it to you -- for a cost.

Michele Johnson, who works with Consumer Credit Counseling, says, "It's outrageous."

The promise of cash comes with a catch. In extreme cases, the loan you'll take out comes with an interest rate of more than a 1,000-percent.

"From my point of view, I don't see how they help," said Johnson, who added that dozens come in every day looking for help. She believes there may be as many as 300 payday loan companies out there.

"It is becoming more and more of a problem," she said.

"The best advice is not to put yourself in a position to take out a payday loan," said Dan Wulz, who works with Clark County Legal affairs, a group that advises people who get sued by pay day loaners.

Because some who don't pay on time, get sued. Fair or unfair, there's not much you can do about it.

"There is no usury law in Nevada. There's no limit on the interest they can charge," said Wulz. "Commonly the working poor, working paycheck to paycheck," continued Wulz speaking of who comes in for counsel.

In fact, Johnson says research shows most of these businesses are set up in middle and low-income areas. "The other companies do give us a bad name," said Aaron Duran, a manager at loan company Check City.

Duran says Check City provides a valuable service by helping people make ends meet. "They'll be impressed with how we do it. How we have cheaper rates than anybody else," he said. The rates at this location at Duran's Check City are at 7.5-percent.

But it's these words by multiple "pay day loan" user, Alex Murrafo, may sum it up best. "As long as you don't exceed your bounds, you're ok," said Murrafo.

Critics admit there's not much that can be done to stop these businesses from popping up. But they would like to see the industry more regulated, and have some sort of cap placed on these interest rates.

You can call the Consumer Affairs Division of the Nevada Department of Business and Industry, or NCAD, in southern nevada at 702-486-7355 or in northern Nevada at 775-688-1800. You can also visit NCAD's website.

You can also call the Attorney General's Bureau of Consumer Protection, or BCP, in southern Nevada at 702-486-3194 or in northern Nevada at 775-687-6300. You can visit the Attorney General's website for additional information.