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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Dec 8, 2011

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The amendment SB 462 was pre-filed last Thursday. SB 462 amends Missouri laws relating to unsecured loans of $500 or less.


This amendment was proposed by Sen. Joe Keaveny, and designed to target the payday loan industry. It plans to stop payday lenders from “rolling over” unsecured payday loans of $500 or less more than once.


The act of “rolling over” loans is what has given the industry such negative public attention. Most consumer protection advocates don’t have a problem with a 15 percent interest rate on the two week term most payday loans carry. But it’s when they’re rolled over, or renewed, several times over that causes advocates to protest the existence of these loans.


When consumers find their payday loans rolling over, they often approach another payday lender for a loan to pay off the initial loan.


As explained on Keaveny’s website, “borrowers can become engulfed in a mountain of debt with no means of escape.”


Currently, Missouri law allows this form of financing to roll over a maximum of six times. SB 462 would limit the number of rollovers to a maximum number of once.


SB 462 would prohibit payday lenders from making loans to those with a payday loan already outstanding. The amendment also seeks to force these lenders to disclose certain measures to consumers before signing any contract. Some of those disclosures include the loan’s duration, due date, and amount of interest and fees that will be charged throughout the duration of the payday loan.


Keaveny has a long-standing history of working in the banking industry. He managed high-income portfolios and worked with the U.S. Securities and Exchange Commission for US Bank before becoming a Senator.


If SB 462 is enacted, it is scheduled to be effective on August 28, 2012.