Payday Loan Reform Will Help Lansing Residents Avoid Debt Trap


During my tenure, I received far too many horror stories from constituents who were caught in a vicious circle of debt caused by payday loan companies.

From single mothers and the elderly to veterans and even college-aged students, payday lenders are causing untold damage to the economic well-being of Michigan residents. The Legislative Assembly has failed to resolve this issue, but voters this November may have their own shot at pushing through the reform.

Payday loans are marketed as short-term solutions to help people weather a financial crisis until their next payday, but the reality is far more grim. These companies market cash quickly and easily as a way to help people pay for a broken water heater or an unexpected car repair. What these lenders don’t disclose is that easy money comes with very strong terms.

Payday loans come with three-digit interest rates and are designed to create a long-term debt cycle. In fact, payday lenders have direct access to a borrower’s bank account so they can get paid first. They don’t care if it bounces other checks or if the borrower hasn’t paid other essentials like rent, utilities or food.

We also know that payday lenders disproportionately target communities of color. For example, data shows 5.6 payday stores per 100,000 residents in Michigan. In Latin American communities, the number of payday loan stores is 18% higher. In black communities, the figure is 25% higher.

In Ingham County, there are 6.1 payday lenders per 100,000 people, a similar rate in Detroit. But the problem is not much different in rural areas. Take Montcalm County, for example, where there are 6.3 payday lenders per 100,000 people. Payday loans benefit people all over the state.

The average payday loan carries an annual percentage rate of 370% APR. The extreme interest rate and fast repayment terms of the loan make it very difficult for a borrower to repay it, which regularly creates a cycle of long-term debt. It should come as no surprise, then, that 70% of Michigan payday borrowers reborrow the same day they repay a previous loan. In fact, the National Consumer Financial Protection Bureau (CFPB) shows that the average payday loan borrower is stuck in a cycle of 10 loans over the course of a year, costing them several times more than the initial debt contracted.

This vicious circle of debt and the money it drains from communities like Lansing is why Governor Black Leadership Advisory Council makes capping payday loan interest rates a top policy priority for the state.

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For years, efforts to push through payday loan reform to stop these unsavory companies from preying on the vulnerable have failed to win the approval of the state’s conservative majority in the state. Legislative Assembly. Fortunately, a new coalition of concerned Michigan citizens has come together to make the change that my fellow lawmakers refused to endorse.

Michiganders for Fair Lending launched a ballot campaign that would finally rule these predatory lending. They are currently wrapping up collecting more than 300,000 signatures that would ask about the November ballot to cap payday loan interest rates at a maximum of 36% APR. This common-sense reform would bring Michigan in line with 18 other states and Washington, DC — in implementing payday loan rate caps.

If you see a collector of petitions in the last few days before their June 1 filing date, I urge you to sign. And if you see the question on your November ballot, I urge you to vote yes!

To learn more about the Michiganders for Fair Lending campaign, visit

Sarah Anthony is the State Representative for Michigan’s 68th District, representing part of the City of Lansing and Lansing Township.


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